UNITED  STATES  NOTES 


A    HISTORY    OF    THE    VARIOUS    ISSUES    OF 

PAPER  MONEY  BY  THE  GOVERNMENT 

OF    THE    UNITED    STATES 


JOHN    JAY    KNOX 

LATE      COMPTROLLER      OF      TfE      CURRENCY 


WITH    AN    APPENDIX    CONTAINING   THE    RECENT    DECISION    OF    THE 

SUPREME    COURT    OF   THE    UNITED    STATES   AND    THE 

DISSENTING    OPINION    UPON    THE    LEGAL 

TENDER    QUESTION 


THIRD     EDITION     REVISED 


NEW  YORK 

CHARLES     SCRIBNER'S     SONS 

1892 


COPV'RIGHT,  1884,  BY 

CHARLES  SCRIBNER'S  SONS 


PREFACE. 


In  the  course  of  his  official  career  the  author  has  had 
occasion  to  deal  with  subjects  kindred  to  those  presented 
in  this  vohirae.  From  time  to  time,  he  has  collected 
material  with  the  hope  of  publishing  at  some  future 
day  a  volume  worthy  of  the  title  of  "  History  of  Bank- 
ing in  the  United  States."  The  results  of  these  investi- 
gations have  appeared  from  time  to  time,  in  official  re- 
ports, occasional  addresses,  and  in  articles  contributed 
to  various  encyclopaedias.  The  present  volume  is  pub- 
lished in  accordance  with  the  request  of  many  friends, 
who  believe  that  at  the  present  time  a  small  volume 
containing  a  historj^  of  all  the  various  issues  of  paper 
money  by  the  Government  will  be  useful  and  interest- 
ing to  the  public. 

The  recent  decision  of  the  United  States  Supreme 
Court  has  virtually  placed  it  in  the  power  of  Congress 
to  issue  United  States  legal  tender  notes  in  any  amount, 
at  any  time  it  may  be  deemed  politic  or  advisable.    A 


Iv  PREFACE. 

connected  hiptory  of  tlie  paper  money  issued  by  the 
CuivcM'iiincnt  will  enable  the  reader  to  trace  the  gradual 
rise  and  development  of  a  doctrine  which  has  at  length 
been  endorsed  by  so  much  Aveight  of  authority. 

At  the  date  of  the  adoption  of  the  Constitution,  the 
issue  of  paper  money  in  any  form  was  popularly  re- 
garded with  aversion.  The  experience  of  the  colonists 
with  bills  of  credit,  as  paper  money  was  then  called, 
had  been  fraught  with  loss  and  political  disturbance, 
and  the  experience  with  the  like  issues  by  the  Contin- 
ental Congress  had  so  affected  the  minds  of  the  wisest 
and  best  men  of  that  time,  that  in  the  Federal  Conven- 
tion the  general  feeling  was  one  of  almost  bitter  opposi- 
tion to  granting  the  power  to  emit  bills  of  credit  to  the 
new  Government.  IS'o  one  can  examine  the  records  of 
those  days  without  being  thoroughly  impressed  that  the 
sense  of  the  Convention  was  in  favor  of  an  absolute 
prohibition.  Further  proof  may  be  found  in  the  fact 
that  from  1791  to  1812,  a  period  of  twenty-one  years, 
the  method  of  raising  funds  for  the  Government  by 
the  issue  of  bills  of  credit  was  not  even  suo^cjested  ; 
nor  indeed  were  circulating  notes,  in  form  payable  on 
demand  without  interest,  issued  at  all,  until  moi-e  than 
seventy  years  after  the  adoption  of  the  Constitution. 

The  charter  of  the  first  Bank  of  the  United  States 
expired  in  1811,  and  the  Federalists  were  not  strong 
enough  to  secure  a  recharter.     When  the  war  of  1S12 


PREFACE.  V 

broke  out,  the  necessity  of  funds  was  so  imperative, 
that  the  Administration  and  Congress  felt  themselves 
forced,  the  one  to  recommend,  and  the  other  to  author- 
ize, the  issue  of  interest-bearing  Treasury  notes.  They 
were  regarded  as  a  measure  of  necessity.  Loans  in  the 
ordinary  form  had  failed,  and  these  notes  were  regarded 
as  a  convenient  form  of  loan.  They  were  not  intended 
to  circulate  as  money ;  they  were  fundable  into  public 
stock,  and,  as  a  matter  of  fact,  were  retired  as  soon  as 
possible  after  the  close  of  the  war.  These  issues  were, 
however,  a  fatal  precedent  out  of  which  has  grown  a 
latitude  of  constitutional  construction  not  then  antici- 
pated. 

From  1815  to  1837,  a  period  of  twenty-two  years, 
there  was  no  resort  to  this  remedy  for  the  relief  of 
the  Government  finances.  In  1836,  the  charter  of 
the  second  Bank  of  the  United  States  expired,  and 
again  party  spirit  prevented  a  recharter.  Soon  after 
came  the  financial  disasters  of  1837,  and  again  the  Ad- 
ministration recommended,  and  Congress  authorized, 
the  issue  of  interest-bearing  Treasm-y  notes  as  forms  of 
short  loans.  These  issues  extended  from  1837  to  1844, 
and  diu-ing  that  period  the  views  of  many,  as  to  the 
constitutionality  of  their  use,  considerably  expanded. 
The  discussions  in  Congress,  and  the  executive  docu- 
ments of  that  day,  show  how  severe  was  the  strug- 
gle  between  the  strict  constructionists  and  those  who 


VI  PREFACE. 

MCi-e  in  favor  of  a  view  of  the  Constitution  giving 
wider  powers  to  Congress. 

During  the  Mexican  war,  1846-1847,  the  plea  of 
necessity  secured  congressional  authority  for  another 
issue  of  interest-bearing  Treasury  notes.  The  financial 
panic  of  1857  again  caused  Congress  to  consider  such 
notes  as  the  only  remedy  for  the  existhig  distress. 

It  remained  for  the  Civil  war,  however,  to  bring 
such  pressure  that  all  remaining  constitutional  scru- 
ples were  swept  away.  Until  1862  no  notes  had 
been  issued  with  the  legal-tender  quality.  All  propo- 
sitions to  make  Government  paper  a  legal  tender  had 
been  rejected  almost  with  contempt  by  Congress.  In 
1862,  however,  the  first  Legal-tender  Act  was  passed, 
and  for  the  first  time,  notes  having  the  quality  of  legal 
tender,  and  intended  to  circulate  as  money,  were  is- 
sued by  the  United  States  Treasury.  These  notes 
were  at  first  fundable  in  United  States  bonds,  and  had 
not  this  provision  been  afterwai-d  repealed  by  Con- 
gress, they  would,  like  previous  issues  of  Treasury 
notes,  have  soon  disappeared  from  circulation.  By  this 
repeal  they  were  made  a  permanent  circulation.  Then 
came  the  decision  of  the  United  States  Supreme  Court, 
reversing  a  former  decision  and  making  them  a  legal 
tender  for  all  debts — for  those  contracted  before  the 
passage  of  the  Legal-tender  Act  as  well  as  for  those 
contracted   after   that   date.     This   decision,   howev^er, 


PREFACE.  vn 

based  the  constitutionality  of  legal-tender  notes  upon 
the  war  powers  of  Congress.  This  still  left  open  the 
question  whether  such  notes  issued  in  time  of  peace 
were  constitutional,  and  the  Supreme  Court  has  now 
settled  that,  under  the  Constitution,  Congress  has 
power,  if  it  deems  it  expedient,  to  issue  legal-tender 
money  to  any  amount,  either  in  time  of  peace  or  war. 

The  chapter  upon  the  distribution  of  the  surplus 
money  of  the  United  States  is,  it  is  believed,  the  first 
complete  history  of  that  subject.  It  serves  to  illus- 
trate the  subject  of  United  States  notes.  The  crisis  of 
1837,  which  at  that  time  was  deemed  sufficient  cause 
for  the  issue  of  the  latter,  can  be  readily  traced  to  the 
withdrawal  of  the  surplus  from  the  banks  to  distribute 
it  among  the  States. 

The  late  decision  of  the  Supreme  Court  on  t!i<}  legal- 
tender  question,  and  the  dissenting  opinion,  on  account 
of  their  importance,  are  given  in  an  Appendix. 

A  considerable  portion  of  the  material  in  the  present 
volume  was  contained  in  the  third  voKime  of  the 
"  Cyclopaedia  of  Political  Science  and  Political  Econ- 
omy," recently  published  by  M.  B.  Cwry  &  Co.,  of 
Chicago  ;  and  by  their  courtesy,  and  with  their  consent, 
it  is  given  to  the  public  in  this  convenient  form. 

In  addition  to  tlie  authorities  quoted,  the  following 
have  been  consulted :  American  State  Papers ;  Annals 
of  Congress ;  Madison  Papers  ;   Elliot's  Debates  ;   Con- 


via  PREFACE. 

gressional  Globe ;  Bolles'  Financial  History  of  the 
United  States;  National  Loans  of  the  United  States, 
by  R.  A.  Bayley ;  Annual  Cyclopaedia  ;  Hunt's  Mer- 
chants' Magazine  ;  Bankers'  Magazine  ;  Schucker's  Life 
of  Chase;  Spaulding's  Legal-tender  Paper  Money; 
Newspapers,  1861,  1862,  1863. 

J.  J.  K. 

Washington,  April  30,  1884. 


COE^TEI^TS. 


PAOX 

PREFACE, iii 

CHAPTER  I. 
Colonial  Paper  Money,  .        .        .        .       .        .       .1 


CHAPTER  II. 
Paper  Money  authorized  by  the  Continental  Congress,      9 

CHAPTER  III. 
Bills  of  Credit  in  the  Federal  Convention,  .        .        •,    13 

CHAPTER  IV. 
Treasury  Notes  authorized  under  the  Constitution,   .    19 

CHAPTER  V. 
Treasury  Notes  of  the  War  op  1812,         ....    21 

CHAPTER  VI. 

Treasury  Notes  of  the  Period  of  the  Financial  Crisis 
OF  1837 40 


X 


CONTENTS. 


CIIArTER  VIT. 

PAGK 

Treasury  Notes  of  tue  Period  of  the  Mexican  War,       03 

CHAPTER  VIII. 
Treasury  Notes  of  the  Buchanan  Administration,         .    70 

CHAPTER   IX. 
'J.'reastjry  Notes  of  the  Period  of  the  Civil  War,         .    80 

CHAPTER  X. 
The  Silver  Dollar  and  the  Silver  Certificate,    .        .  148 

CHAPTER  XI. 

The  Legal-tender  Cases  in  the  Supreme  Court  op  the 
United  States, 156 

CHAPTER   XII. 
The  Distribution  of  the  Surplus  among  the  States,     .  167 


APPENDIX 193 

INDEX 231 


LIST  OF   FAC-SIMILES  AND    FORMS    OF 
TREASURY   NOTES. 


Form  of  One  Hundred  Dollar  Note,  Act  February  24, 1815, 
bearing  interest  at  5|  per  cent,  or  one  cent  and  one- 
balf  a  cent  per  day.  Page  35 

Form  of  Five  Dollar  Note,  Act  Februaiy  24,  1815,  fund- 
able into  seven  per  cent,  bonds.  Page  36 

Form  of  One  Hundred  Dollar  one  year  Note,  Act  March 
81,  1840,  bearing  interest  at  five  per  cent.         Page  47 

Form  of  One  Hundred  Dollar  one  year  Note,  Act  July  22, 
1846,  bearing  interest  at  5|  per  cent.  Page  65 

Form  of  One  Hundred  Dollar  two  years  Note,  Act  January 
28,  1847,  bearing  interest  at  six  per  cent.  Page  67 

Form  of  One  Hundred  Dollar  one  3'ear  Note,  Act  Decem- 
ber 23,  1857,  bearing  interest  at  three  per  cent. 

Page  1?\ 

Form  of  Fifty  Dollar  two  years  Note,  Act  March  2,  18C1, 
bearing  interest  at  six  per  cent.  Page  8  \ 

Form  of  Ten  Dollar  Note,  being  the  first  Demand  Nota 
ever  issued  by  the  United  States,  Act  July  17,  18G1. 

Page  91 


xii  FACSIMILES  OF  TREASURY  NOTES. 

Fonn  of  Seven-thirty  Fifty  Dollar  three  years  Note,  in- 
terest  one  cent  per  day,  Act  March  3,  1865.     Page  101 

Form  of  Five  Cent  Postage  Currency  and  Reverse,  re- 
ceivable for  Postage  Stamps,  Act  July  17,  1862. 

Page  105 

Form  of  Ten  Cent  Postage  Currency  and  Reverse,  Act 
July  17,  1862.  Page  106 

Form  of  Twenty-five  Cent  Postage  Cun*ency  and  Reverse, 
Act  July  17,  1862.  Page  107 

Form  of  Fifty  Cent  Postage  Currency  and  Reverse,  Act 
July  17,  1862.  Page  108 

Foi-m  of  Compound  Interest  three  years  Ten  Dollar  Note, 
bearing  interest  at  six  per  cent.,  compounded  semi- 
annuaUy,  Act  June  30,  1864  Page  111 

Form  of  Reverse  of  Note,  gi\ing  interest  for  each  six 
months.  Page  112 


UNITED  STATES  NOTES. 


CHAPTER  I. 

COLONIAL   PAPER   MONEY. 


Previous  to  tlie  Revolutionary  War  paper  money  was 
issued  to  a  greater  or  less  extent  by  each  one  of  the 
thirteen  colonies.  The  first  issue  M'as  by  Massachusetts 
in  1690,  to  aid  in  fitting  out  the  expedition  against 
Canada.  Similar  issues  had  been  made  by  Isew  Hamp- 
shire, Rhode  Island,  Connecticut,  Isew  York,  and  Isew 
Jersey,  previous  to  the  year  1711.  South  Carolina 
began  to  emit  bills  in  1712,  Pennsylvania  in  1723, 
Maryland  in  1734,  Delaware  in  1739,  Virginia  in  1755, 
and  Georgia  in  17C0.  Originally  the  issues  were  au- 
thorized to  meet  the  necessities  of  the  colonial  treasuries. 
In  Massachusetts,  in  1715,  as  a  remedy  for  the 
prevailing  embarrassment  of  trade,  a  land  bank  was 
proposed  with  the  right  to  issue  circulating  notes  se- 
cured by  land.  John  Colman,  a  merchant  of  Boston, 
urgently  advocated  its  establishment.  The  land  bank 
was  forbidden  by  the  Province  Council,  unless  author- 
ized by  the  General  Assembly.  There  was  a  large  party, 
1 


2  UNITED  STATES  NOTES. 

liowover,  in  favor  of  paper  money  in  some  form.  Tlie 
plan  for  the  land  bank  was  defeated,  but  the  issue  of 
paper  money  by  the  treasury  was  antliorized  to  the  ex- 
tent of  £50,000,  to  be  loaned  on  good  mortgages  in 
sums  of  not  more  than  £500,  nor  less  than  £50,  to  one 
person.  The  rate  of  interest  was  5  per  cent.,  payable 
with  one-fifth  of  the  principal,  annually.  The  bills 
were  in  form  the  same  as  those  previously  issued  for 
the  benefit  of  the  treasury.  This  round  sum  or  aggre- 
gate of  £50,000,  to  be  so  loaned,  was  styled  a  bank,  and 
was  the  first  of  the  so-called  loan  banks,  which  were 
afterward  authorized  by  nearly,  if  not  quite,  all  of  the 
colonies.  In  1733  an  issue  of  bills  to  the  amount  of 
£110,000  was  made  by  the  merchants  of  Boston,  which 
were  to  be  redeemed  at  the  end  of  ten  years,  in  silver, 
at  the  rate  of  19  shillings  per  ounce.  In  1739,  the  com- 
mercial and  financial  embarrassment  still  continuing, 
another  land  bank  was  started  in  Massachusetts.  John 
Colman  was  one  of  the  corporators.  The  stock  of  the 
land  bank  was  to  be  £150,000.  Xo  one  was  permitted 
to  subscribe  more  than  £2,000,  nor  less  than  £100.  The, 
subscribers  were  to  pay  down  lawful  monej'  at  the  rate 
of  40  shillings  for  every  £1,000  subscribed,  and  for  the 
remainder  M^ere  to  pledge  security  in  lands  to  the  satis- 
faction of  the  directoi's.  They  were  to  pay  3  per  cent, 
interest  per  annum,  either  in  bills  of  the  bank  or  in 
produce  and  manufactures,  at  prices  regulated  by  the 
directors.  Circulating  notes  equal  to  the  capital  were 
to  be  issued,  payable  in  twenty  years  in  produce  or 
manufactures,  and  5  per  cent,  of  the  capital  was  to  be 
paid  annually  in  the  notes,  produce,  or  articles  manu- 
factured.     The  "  manufactures,  being  the  produce  of 


FIRST  Paper  money  issued,-  bubble  act.    3 

this  province,"  were  enumerated  as  follows : '  "  Hemp, 
flax,  cordage,  bar  iron,  cast  iron,  linens,  sheep's  wools, 
copper,  tanned  leather,  flaxseed,  beeswax,  bayberry 
wax,  sail  cloth  or  canvas,  nails,  tallow,  lumber  or  cord 
wood,  or  logwood  from  New  Spain."  This  scheme 
was  strenuously  opposed  by  Governor  Belcher,  but  in 
spite  of  all  opposition  £49,250  of  its  notes  were  struck 
off,  of  which  the  treasurer  of  the  company  issued 
£35,582,  and  £-4,007  were  employed  by  the  directors  in 
trade. 

A  specie  bank  was  also  formed  in  1739,  by  Edward 
Hutchinson  and  others,  which  issued  bills  to  the  amount 
£120,000,  redeemable  in  fifteen  years  in  silver,  at  20  shil- 
lings per  ounce,  or  gold  pro  rata.  The  payment  of  these 
notes  was  guaranteed  by  wealthy  and  responsible  mer- 
chants. These  notes,  and  those  of  a  similar  issue  in  1733, 
were  largely  hoarded  and  did  not  pass  generally  into 
circulation. 

In  1740  Parliament  passed  a  bill  to  extend  the  act  of 
1720,  known  as  the  bubble  act,  to  the  American  colonies, 
with  the  intention  of  breaking  up  all  companies  formed 
for  the  purpose  of  issuing  paper  mone}'.  Under  this 
act  both  the  land  bank  and  the  specie  bank  were  forced 
to  liquidate  their  affairs,  though  not  without  some  I'c- 
sistance  on  the  part  of  the  former.  The  Governors  of 
Massachusetts  rendered  themselves  very  obnoxious  to 
the  people  by  their  determined  opposition  to  these  banks 
and  to  paper  money  generally,'^  and  Governor  Belcher 

'  An  Historical  Account  of  Massachusetts  Currency,  p.  103.  By 
Joseph  B.  Felt.     Boston,  1839. 

'•'  The  History  of  Massachusetts  Bay,  vol.  ii. ,  p.  396.  By  Lieutenant- 
Governor  Hutchinson.     Boston,  1707. 


4  UNITED  STATES  NOTES. 

was  recalled  to  England  on  account  of  misrepresentations 
of  the  paper  money  advocates,  but  was  subsequently  ap- 
pointed Governor  of  Xew  Jersey. 

The  paper  money  of  the  colonies,  whether  issued  by 
them  or  by  the  loan  banks,  depreciated  almost  without 
exception  as  the  amounts  in  circulation  increased.  The 
bills  as  originally  emitted  were  intended  to  be  equal  to 
coin,  but  when  depreciation  advanced  to  such  an  extent 
as  to  appal  the  authorities,  a  new  set  of  bills  would  be 
issued,  with  new  assurances  that  they  would  be  kept 
equal  to  coin.  In  these  new  bills  the  old  bills  would  be 
redeemable  at  their  depreciated  value.  Sometimes  this 
second  set  of  bills,  having  also  depreciated,  was  replaced 
by  a  third  set  in  the  same  Avay.  These  various  sets  were 
designated  tenors ;  the  terms  old  tenor,  middle  tenor, 
new  tenor,  new  tenor  1st,  new  tenor  2d,  being  used  to 
distinguish  them.  To  give  all  the  details  of  the  depre- 
ciation of  this  currency  in  each  of  the  colonies  would  re- 
quire much  space  ;  but  the  best  authorities  agree  that  it 
underwent  in  all  cases  a'constant  diminution  in  value, 
inflicting  loss  and  misery  upon  all  classes  of  citizens. 
Pelatiah  Webster  says  of  this  paper  and  the  continental 
currency:  "We  have  suffered  more  from  this  cause  than 
from  any  other  cause  or  calamity.  It  has  killed  more 
men,  pervaded  and  corrupted  tlie  choicest  interests  of 
our  country  more,  and  done  more  injustice  than  even  the 
arms  and  artifices  of  our  enemies."  The  following  table^ 
gives  the  price  of  £100  in  coin  in  the  currencies  of  the 
several  colonies  in  the  year  171:8  : 

'  A  Short  History  of  Paper  Money  and  Banking  in  the  United 
States,  p.  10.     By  Wm.  M.  Gouge.     Philadelphia,  1833. 


VALUE  OF  PAPER  MONET  IN  COIN. 

New  England £1,100 

New  York 190 

New  Jersey £180  to  190 

Pennsylvania 180 

Maryland 200 

North  Carolina 1,000 

South  Carolina 750 

Virginia £120  to  125 


The  emission  of  bills  by  the  colonies  and  the  banks  was 
not  regarded  with  favor  by  the  mother  country,  and  the 
provincial  governors  were  as  a  general  thing  opposed  to 
these  issues.  They  were  consequently  frequently  em- 
broiled with  their  legislatures.  Felt,  in  his  "  Massachu- 
setts Currency,"  gives  examples  of  this  controversj'. 
Governor  Belcher,  in  1740,  issued  the  following  proclama- 
tion :  "  Whereas,  a  scheme  for  emitting  bills  or  notes  by 
John  Colman,  Esq.,  and  others, was  laid  before  the  General 
Court  in  their  session  held  the  5th  of  December,  1739, 
and  by  a  report  of  a  committee  appointed  by  said  Court, 
was  represented,  if  carried  on,  to  have  a  great  tendency 
to  endamage  His  Majesty's  good  snbjects  as  to  their 
properties ;  and  whereas,  application  has  been  very 
lately  made  to  me  and  His  Majesty's  Council,  by  a  great 
number  of  men  of  the  most  considerable  estates  and 
business,  praying  that  some  proper  method  may  be 
taken  to  prevent  the  inhabitants  of  this  province  being- 
imposed  upon  by  the  said  scheme  ;  and  it  being  very 
apparent  that  these  bills  or  notes  promise  nothing  of 
any  determinate  value,  and  can  not  have  any  general, 
certain  or  established  credit ;  wherefore,  I  have  thought 
fit,  by  and  with  the  advice  of  His  Majesty's  Council,  to 
issue  this  proclamation,  hereby  giving  notice  and  warn- 


6  UNITED  STATES  NOTES. 

ing  to  all  II  is  Majesty's  good  subjects  of  tlio  danger  they 
are  in,  and  cautioning  them  against  receiving  or  passing 
the  said  notes,  as  tending  to  defraud  men  of  their  sub- 
stance and  to  disturb  the  peace  and  good  order  of  the 
people,  and  to  give  great  interruption  and  bring  much 
confusion  into  their  trade  and  business." 

Subsequently,  on  KovemberG,  of  the  same  year,  being 
assured  that  part  of  the  military  corps  encouraged  the 
circulation  of  the  land  bank  paper,  he  published  the  fol- 
lowing :  "  I  hereby  warn  all  commissioned  officers  in  the 
militia  from  signing  or  giving  any  countenance  to  the 
passing  of  the  said  notes  of  hand,  directly  or  indirectly. 
And  as  I  apprehend  that  if  these  should  obtain  a  cur- 
rency, it  will  reflect  great  dishonor  on  His  Majesty's  Gov- 
ernment here,  and  be  \&Yy  detrimental  to  the  public  in- 
terests of  this  province  and  people,  I  do  hereby  declare 
my  firm  resolution,  that  if  after  this  publick  notice  given, 
any  of  the  military  officers  of  this  province  persist  in 
being  any  way  concerned  in  or  giving  any  encouragement 
"whatsoever  to  the  passing  of  the  said  notes  of  hand,  and 
full  proof  be  made  thereof  to  my  satisfaction,  I  will  im- 
mediately dismiss  them  from  their  said  offices."  These 
proclamations  had  but  little  effect.  A  gentleman  writing 
to  a  correspondent  in  London,  nnder  date  of  February 
27,  1741,  says:  "  Whole  troops,  nay  almost  whole  regi- 
ments either  resigned  or  told  their  colonels,  who  ex- 
amined them,  that  they  wonld  resign  rather  than  not 
encourage  the  bills."  Later  in  the  same  year  Governor 
Belcher  writes  to  Thomas  Hutchinson :  "  You  say  it 
would  be  much  better  if  some  other  waj-  than  by  appli- 
cation to  Parliament  could  be  found  to  suppress  it  (land 
bank).     I  assure  you,  the  concerned  openly  declare  they 


PAPER  MONEY  A  CAUSE  OF  THE  REVOLUTION.     7 

defy  any  act  of  Parliament  to  be  able  to  do  it.  They 
are  grown  so  brassy  and  hardy  as  to  be  now  combining 
in  a  body  to  raise  a  rebellion,  and  the  day  set  for  their 
coming  to  this  town  is  at  the  election,  and  their  treas- 
in-er,  I  am  told,  is  in  the  bottom  of  the  design,  and  I 
doubt  it  not.  I  have  this  day  sent  the  sheriff  atid  his 
officers  to  appi'ehend  some  of  the  heads  of  the  conspir- 
ators." 

These  continued  disputes,  which  largely  curtailed  the 
use  of  an  expedient  which  the  colonists  considered 
necessary  to  their  prosperity,  together  with  the  action 
of  Parliament  in  restricting  the  issue  of  paper  money, 
embittered  the  minds  of  the  colonists  against  England, 
and  had  undoubtedly  much  to  do  with  the  final  out- 
break. The  Bubble  Act,  M'hicli  laid  an  interdict  on  all 
banking  associations  having  no  legal  charter  within  the 
dominions  of  the  king,  was  passed  by  Parliament  in 
1720.  In  17-iO  another  enactment  was  made,  extending 
the  provisions  of  the  act  of  1720  to  the  American  colo- 
nies, where  it  had  been  disregarded.  Banking  in  those 
days  consisted  merely  in  the  piivilege  of  issuing  circu- 
lating notes,  and  this  act  restricted  all  private  enter- 
prises of  this  kind.  On  June  25,  1751,  Parliament 
enacted  a  law  forbidding  paper  money  of  the  colonies 
to  be  passed,  except  for  current  expenses  of  the  Govern- 
ment each  year,  or  in  case  of  invasion  by  the  enemy. 
It  seems  also  that  these  exceptional  cases,  where  paper 
money  was  permitted,  were  to  be  under  control  of  the 
Crown,  as  Mr.  Bollan,  the  agent  in  London  of  the  prov- 
ince of  Massachusetts,  wi-ites  that  he  opposed  the  bill 
on  the  ground  that  it  might  open  the  way  for  the  un- 
constitutional  exercise  of   the   king's  authority  in  the 


8  UNITED  STATES  NOTES. 

colonies  in  other  matters.  Legal  tender  paper  money 
was  prohibited  by  this  act  of  Parliament,  and  in  1703 
such  issues  were  declared  void  ;  but  subsequently,  in 
1773,  they  were  allowed  to  be  received  as  legal  tender 
at  the  treasuries  of  the  several  colonies. 


CHAPTEE  11. 

PAPEK  MONET  AUTHORIZED  BY  THE  CONTINENTAL  CON- 
GRESS. 

The  second  Continental  Congress  was  convened  in  1775, 
and,  in  order  to  raise  funds,  having  no  power  to  insti- 
tute taxation,  naturally  turned  toward  the  expedient  of 
an  emission  of  paper  money  on  the  credit  of  the  Union, 
but  in  the  redemption  of  which  each  colony  was  to  bear 
a  part.  The  first  issue  was  made  in  June,  1775.  For 
a  year  these  issues  continned  equal  to  gold  ;  in  two 
years  they  had  depreciated  to  2  for  1  ;  in  three  years  to 
4  for  1  ;  in  nine  months  more  their  relative  value  was 
10  for  1  ;  in  September,  1779,  it  was  20  for  1.  Con- 
gress now  determined  that  the  total  issues  should  not 
exceed  $200,000,000,  and  renewed  the  declaration  that 
this  currency  should  be  redeemed  in  full,  and  went  to 
some  labor  to  prove  that  the  States  had  the  ability  to  do 
so.  In  March,  1780,  these  issues  had  so  depreciated 
that  their  value,  as  compared  with  specie,  M\as  as  40  to  1. 
Congress  now  required  the  whole  to  be  brought  in  for 
redemption  at  its  market  value  in  coin,  and  also  author- 
ized the  emission  of  new  notes  bearing  interest  at  5  per 
cent.,  and  payable  six  years  from  date  in  silver  and  gold. 
These  were  to  be  exchanged  in  the  proportion  of  1 
dollar  of  the  new  for  20  dollars  of  the  old  emission. 
1* 


10  UNITED  STATES  NOTES. 

During  the  year  1780  tlic  notes  of  tlio  old  issue  sank 
lirst  to  75  to  1,  then  ceased  to  cirenlate  in  the  States 
north  of  tlie  Potomac.  In  Virginia  and  North  Carolina 
they  passed  for  a  year  longer,  and  finally  depreciated  to 
1,000  to  1,  and  tlien  ceased  to  circulate. 

According  to  Thomas  Jeiferson,  but  200  millions  of 
tlie  first  emission  was  issued,  wliicli  was  the  amonnt  au- 
thorized by  resolution  of  Congress ;  but  other  authorities 
state  the  amount  much  higher.  Joseph  Kourse,  register 
of  the  treasury  in  1828,  places  it  at  $21:1, 552,780.  The 
amount  as  given  in  the  treasury  statement  of  1843  was 
8242,100,176.  The  aggregate  loss  to  the  people  of  tlie 
country  from  this  currency  was  estimated  by  Secretary 
Woodbury  at  8106,000,000.  During  the  war  paper 
money,  distinct  from  the  continental  currency,  was  also 
issued  by  several  of  the  States.  The  amount  thus  issued 
has  been  placed  at  §209,000,000,  which  is  probably  too 
high.  It  is,  however,  diflScult  to  obtain  exact  informa- 
tion in  reference  to  these  emissions. 

At  the  close  of  the  war  the  minds  of  all  classes  were 
imbued  with  a  wholesome  antipathy  to  paper  money,  and 
as  a  consequence,  when  the  Federal  Constitution  was  un- 
der consideration,  the  power  to  emit  bills,  which  in  the 
original  draft  was  given  to  the  United  States,  %vas  sti'ick- 
en  out.  Moreover,  the  original  draft  having  contained 
a  qualified  permission  to  the  States  to  issue  paper  money, 
an  amendment  was  inserted  which  took  away  from  the 
States  all  power  to  coin  money,  emit  bills  of  credit,  or 
make  anything  but  gold  or  silver  coin  a  tender  in  pay- 
ment of  debts.  It  has  been  held  that  the  lack  of  power 
on  the  part  of  a  State  to  coin  money,  taken  in  connection 
with  the  prohibition  of  the  emission  of  bills,  prevents  the 


VIEWS  OF  WEBSTER  AND  STORY.  11 

issue  of  paper  money  by  baiilcs  chartered  by  the  State,  as 
uell  as  such  issue  by  the  State  itself.  Tliis  view  was  hekl 
by  Daniel  Webster,  in  his  speech  on  the  Bank  of  the 
United  States,  on  the  25th  and  2Sth  of  May,  1832,  and 
his  arguments  are  quoted  "vvith  commendation  by  Mr. 
Justice  Story,  in  his  commentaries  on  the  Constitution, 
as  follows:  "It  will  be  hereafter  seen  that  this  (the 
power  to  coin  money)  is  an  exclusive  power  in  Congress, 
the  States  being  expressly  prohibited  from  coining  money. 
And  it  has  been  said  by  an  eminent  statesman  that  it 
is  difficult  to  maintain,  on  the  face  of  the  Constitution  it- 
self, and  independent  of  long-continued  practice,  the  doc- 
trine that  the  States,  not  being  at  liberty  to  coin  money, 
can  authorize  the  circulation  of  baidc  paper  as  curi'ency 
at  all.  His  reasoning  deserves  grave  consideration,  and 
is  to  the  following  effect :  The  States  cannot  coin  money. 
Can  they,  then,  coin  that  which  becomes  the  actual  and 
almost  universal  substitute  for  money  ?  Is  not  the  right 
of  issuing  paper  intended  for  circulation  in  the  place  and 
as  the  representative  of  metallic  currency,  derived  merely 
from  the  power  of  coining  and  regulating  the  metallic 
currency  ?  Could  Congress,  if  it  did  not  possess  the  power 
of  coining  money  and  regulating  the  value  of  foreign 
coins,  create  a  bank  with  the  power  to  circulate  bills  ?  It 
would  be  difficult  to  make  it  out.  "Where,  then,  do  the 
States,  to  whom  all  control  over  the  metallic  currency  is 
altogether  prohibited,  obtain  this  power  ?  It  is  true  that 
in  other  countries  private  bankers,  having  no  legal  author- 
ity over  the  coin,  issue  notes  for  circulation.  But  this  they 
do  always  with  the  consent  of  the  Government,  express  or 
implied ;  and  Government  restrains  and  regulates  all  their 
operations  at  its  pleasure.     It  would  be  a  startling  propo 


12  UNITED  STATES  NOTES. 

sition  in  any  other  part  of  tlie  world,  that  the  prerogative 
of  coining  money  hekl  by  the  Gcerninent  was  liable  to 
be  defeated,  euiuiteracted,  or  impeded  by  another  pi'e- 
rogative,  held  in  other  hands,  of  authorizing  a  paper  cir- 
culation. It  is  further  to  be  observed  that  the  States 
cannot  issue  bills  of  credit ;  not  that  they  cannot  make 
them  a  legal  tender,  but  that  they  cannot  issue  them  at 
all.  This  is  a  clear  indication  of  the  intent  of  the  Con- 
stitution to  restrain  the  States  as  w^ell  from  establish- 
ing a  paper  circulation  as  from  interfering  with  the 
metallic  circulation.  Banks  have  been  created  by  States 
with  no  capital  whatever,  their  notes  being  put  in  circu- 
lation simply  on  the  credit  of  the  State.  "What  are  the 
issues  of  such  banks  but  bills  of  credit  issued  by  the 
State  ?  "  Mr.  Justice  Story  says :  "  This  opinion  was 
not  peculiar  to  Mr.  Webster ;  it  was  maintained  also  by 
Hon.  Samuel  Dexter,  one  of  the  ablest  statesmen  and. 
lawyers  who  have  adorned  the  annals  of  the  country." 

ISTearly  thirty  years  after.  Chief  Justice  Chase,  w^hen 
Secretary  of  the  Treasury,  in  his  report  to  Congress,  of 
December  9,  1861,  said  :  "  It  has  well  been  questioned 
by  the  most  eminent  statesmen,  whether  a  currency  of 
bank  notes,  issued  by  local  institutions  under  State  laws, 
is  not,  in  fact,  prohibited  by  the  national  Constitution. 
Such  emissions  certainly  fall  within  the  spirit,  if  not 
within  the  letter,  of  the  constitutional  prohibition  of  the 
emission  of  bills  of  credit  by  the  States,  and  of  the  mak- 
ing by  them  of  anything  except  gold  and  silver  coin,  a 
legal  tender  in  payment  of  debts." 


CHAPTER  HI. 

BILLS    OF   CREDIT   IN   THE   FEDERAL    CONVENTION. 

The  committee  appointed  by  the  Federal  Convention  held 
in  Philadelphia  on  May  14,  1787,  reported,  on  August 
G,  a  draft  of  the  Constitution,  which  contained,  in  article 
thirteen,  a  clause  giving  qualified  authority  to  the  States 
to  issue  paper  money,  as  follows:  "No  State  without 
the  consent  of  the  Legislature  of  the  United  States  shall 
emit  bills  of  credit,  or  make  anything  but  specie  a  ten- 
der in  payment  of  debt."  This  clause,  after  discussion, 
was  finally  so  amended  as  to  read  as  follows  :  ''  No  State 
shall  coin  money,  emit  bills  of  credit,  make  anything 
but  gold  and  silver  coin  a  tender  in  payment  of  debts." 
The  eighth  clause  of  the  first  section  of  the  seventh 
article  of  the  Constitution,  as  presented  for  the  consid- 
eration of  the  Convention,  provided  that "  the  Legislature 
of  the  United  States  shall  have  power  to  borrow  money, 
and  emit  bills  on  the  credit  of  the  United  States."  This 
clause,  as  embodied  in  the  eighth  section  of  the  first 
article  of  the  Constitution  as  finally  adopted,  reads, 
"  The  Congress  shall  have  power  to  borrow  money  on 
the  credit  of  the  United  States."  The  debate '  on 
the  question  of  striking  out  the  words  "  and  emit  bills," 
is  important,  for  the  reason  that  the  subject  of  making 

'  Madison  papers,  vol.  iii.,  p.  1343. 


14  UNITED  STATES  NOTES. 

bills  of  credit  issued  l)y  the  Government  a  legal  tender, 
uas  there  for  the  first  time  discussed,  aud  was  not  sub- 
sequently at  any  time,  as  far  as  I  am  aware,  discussed  at 
any  length  by  Congress,  though  it  was  twice  presented 
for  its  consideration,  until  the  Legal  Tender  acts  of  1SC2 
were  brought  before  Congress  for  its  consideration. 
This  debate  was  as  follows  : 

"  Mr.  Gouverneur  Morris  moved  to  strike  out,  '  and 
emit  bills  on  the  credit  of  the  United  States.'  If  the 
United  States  had  credit,  such  bills  would  be  unneces- 
sary ;  if  they  had  not,  nnjust  and  useless.  Mr.  Butler 
seconds  the  motion.  Mr.  Madison :  Will  it  not  be  suffi- 
cient to  prohibit  the  making  them  a  tender  ?  This  will 
remove  the  temptation  to  emit  them  with  unjust  views. 
And  promissoiT  notes,  in  that  shape,  may  in  some  emer- 
gencies be  best.  Mr.  Gouverneur  Morris :  Striking 
out  the  words  will  leave  room  still  for  notes  of  a  re- 
sponsible minister,  which  Avill  do  all  the  good  without  the 
mischief.  The  moneyed  interest  will  oppose  the  plan  of 
Government,  if  paper  emission  be  not  prohibited. 

"Mr.  Gorham  was  for  striking  out  without  inserting 
any  prohibition.  If  the  words  stand,  they  may  suggest 
and  lead  to  the  measure.  Mr.  Mason  had  doubts  on  the 
subject.  Congress,  he  thought,  M^ould  not  have  the 
power,  unless  it  were  expressed.  Though  he  had  a  mor- 
tal hatred  to  paper  money,  yet  as  he  could  not  foresee 
all  emergencies,  he  was  unwilling  to  tie  the  hands  of  the 
Legislature.  He  observed  that  the  late  M-ar  could  not 
have  been  carried  on,  had  such  a  prDhibition  existed. 
Mr.  Gorham  :  The  power,  as  far  as  it  will  be  necessary 
or  safe,  is  involved  in  that  of  borrowing. 

"  Mr.  Mercer  was  a  friend  to  paper  money,  though 


BILLS  OF  CREDIT  IN  FEDERAL  CONVENTION.      15 

ill  tlie  pi-escnt  state  and  temper  of  America,  he  should 
neither  propose  nor  approve  of  such  a  measure.  He 
was  consequently  opposed  to  a  prohibition  of  it  alto- 
gether. It  will  stamp  suspicion  on  the  Government,  to 
deny  it  a  discretion  on  this  point.  It  was  impolitic, 
also,  to  excite  the  opposition  of  all  those  who  were 
friends  to  paper  money.  The  people  of  property 
would  be  sure  to  be  on  the  side  of  the  plan,  and  it  was 
impolitic  to  purchase  their  further  attachment  with 
the  loss  of  the  opposite  class  of  citizens.  Mr.  Ellsworth 
thought  this  a  favorable  moment  to  shut  and  bar  the 
door  against  paper  money.  The  mischiefs  of  the  vari- 
ous experiments  which  had  been  made  were  now  fresh 
in  the  public  mind,  and  had  excited  the  disgust  of  all 
the  respectable  part  of  America.  By  withholding  the 
power  from  the  new  Government,  more  friends  of  influ- 
ence would  be  gained  to  it  than  by  almost  anything  else. 
Paper  money  can  in  no  case  be  necessary.  Give  the 
Government  credit,  and  other  resources  will  offer.  The 
power  may  do  harm,  never  good.  Mr.  Randolph,  not- 
withstanding his  antipathy  to  paper  money,  could  not 
agree  to  strike  out  the  words,  as  he  could  not  foresee  all 
the  occasions  that  might  arise. 

"  Mr.  Wilson  :  It  will  have  a  most  salutary  influence 
on  the  credit  of  the  United  States  to  remove  the  possi- 
bility of  paper  money.  This  expedient  can  never  suc- 
ceed while  its  mischiefs  are  remembered.  And  as  long 
as  it  can  be  resorted  to,  it  will  be  a  bar  to  other  resources. 
Mr.  Butler  remarked  that  paper  was  a  legal  tender  in 
no  country  in  Europe.  He  was  urgent  for  disarming 
the  Government  of  such  a  power.  Mr.  Mason  was  still 
averse  to  tying  the  hands  of  the  Legislature  altogether. 


16  rxm:/)  states  notes. 

If  there  wns  no  cxaiiii)lo  in  Europe,  as  just  reinarked,  it 
might  be  observed,  ou  the  other  side,  that  there  was 
none  in  which  the  Government  was  restrained  on  this 
head.  Mr.  Head  thought  the  words,  if  not  struck  out, 
would  be  as  ahirniing  as  the  mark  of  the  beast  in  Reve- 
lation. Mr.  Langdon  had  rather  reject  the  whole  plan 
than  retain  the  three  words,  'and  emit  bills.' 

"  On  the  motion  for  striking  out,  Xew  Hampshire, 
Massachusetts,  Connecticut,  Pennsylvania,  Delaware, 
Virginia,  Xorth  Carolina,  South  Carolina,  Geoi-gia,  aye 
— 9 ;  New  Jersey,  Maryland,  no — 2.  The  clanse  for 
borrowing  money  was  agreed  to,  nem.  con.   Adjourned." 

Kine  States  voted  to  strike  out,  and  two  States  to  re- 
tain. Virginia  voted  in  the  affirmative,  and  in  explana- 
tion of  his  vote,  Mr.  Madison  appended  the  following 
note :  "  This  vote  in  the  affirmative  by  Virginia  Avas  oc- 
casioned by  the  acquiescence  of  Mr.  Madison,  who  be- 
came satisfied  that  striking  out  the  words  would  not 
disable  the  Government  from  the  use  of  public  notes  as 
far  as  they  could  be  safe  and  proper,  and  would  only 
cut  off  the  pretext  for  a, paj^er  currenc)/,  and  particularly 
for  making  the  bills  a  tender  either  for  public  or  private 
debts." 

Mr.  Martin,  of  Maryland,  a  delegate  to  the  Federal 
Convention,  who  was  in  favor  of  i-etaining  the  words,  in 
his  address  to  the  Legislature  of  his  own  State,  soon 
after  the  proceedings  of  the  Convention,  said : '  "  By 

'  "  The  Genuine  Information  delivered  to  the  Legislature  of  Mary- 
land, relative  to  the  Proceedings  of  the  General  Convention  lately 
held  at  Philadelphia,  by  Luther  Martin,  Esq.,  Attorney  General  of 
Maryland,  and  one  of  the  Delegates  in  the  said  Convention.  Phil- 
adelphia: printed  by  Eleazer  Oswald,  at  the  Coffee  House.     1788." 


PHILIPPIC  OF  DELEGATE  MARTIX,   OF  MB.      17 

our  original  articles  of  confederation,  the  Congress 
have  a  power  to  borrow  money  and  emit  bills  of 
credit  on  the  credit  of  the  United  States  ;  agreeable 
to  which  was  the  report  on  this  system  as  made  by  the 
Committee  of  Detail.  When  we  came  to  this  part  of  the 
report,  a  motion  was  made  to  strike  out  the  words,  '  to 
emit  bills  of  credit ; '  against  the  motion  we  urged  that 
it  M'ould  be  improper  to  deprive  the  Congi-ess  of  that 
power ;  that  it  would  be  a  novelty  unprecedented  to  es- 
tablish a  government  which  should  not  have  such  au- 
thority. That  it  was  impossible  to  look  forward  into 
futurity  so  far  as  to  decide  that  events  might  not  hap- 
pen that  should  render  the  exercise  of  such  a  power  ab- 
solutely necessary.  And  that  we  doubted  whether,  if  a 
war  should  take  place,  it  would  be  possible  for  this  coun- 
try to  defend  itself  without  having  recourse  to  paper 
credit,  in  which  case  there  would  be  a  necessity  of  be- 
coming a  prey  to  our  enemies,  or  violating  the  Constitu- 
tion of  our  Government ;  and  that,  considering  the  ad- 
ministration of  the  government  would  be  principally  in 
the  hands  of  the  wealthy,  there  could  be  little  reason  to 
fear  an  abuse  of  the  power  by  an  unnecessary  or  injuri- 
ous exercise  of  it.  But,  sir,  a  majority  of  the  Conven- 
tion, being  wise  be3'ond  every  event,  and  being  willing 
to  risque  any  political  evil  rather  than  admit  the  idea 
of  a  paper  emission,  in  any  possible  case,  refused  to 
trust  this  authority  to  a  Government  to  which  they  were 
lavishing  the  most  unlimited  powers  of  taxation,  and  to 
the  mercy  of  which  they  were  willing  blindly  to  ti'ust 
the  liberty  and  pi'opcrty  of  the  citizens  of  every  State 
in  the  Union  ;  and  they  erased  that  clause  from  the  sys- 
tem." 


IS  UNITED  STATES  NOTES. 

Fortj'-ciglit  3'ears  later,  in  a  speech  in  the  Senate  on  the 
famous  "specie  circnlar'-  in  183G,  Daniel  Webster  said  : 
"  Most  nnqnestionablj  there  is  no  legal  tender,  and 
there  can  be  no  legal  tender  in  this  country,  under  the 
autlioritj  of  this  Government  or  any  other,  but  gold  and 
silver,  either  the  coinage  of  our  own  mints  or  foreign 
coins  at  rates  regulated  by  Congress.  This  is  a  Constitu- 
tional principle,  perfectly  plain  and  of  the  highest  im- 
portance. The  States  are  expressly  prohibited  from 
making  anything  but  gold  and  silver  a  legal  tender  in 
payment  of  debts,  and  although  no  such  express  pro- 
hibition is  applied  to  Congress,  yet,  as  Congress  has  no 
power  granted  to  it  in  this  respect  but  to  coin  money 
and  to  regulate  the  value  of  foreign  coins,  it  clearly  has 
no  power  to  substitute  paper  or  anything  else  for  coin 
as  a  tender  in  payment  of  debts  and  in  discharge  of 
contracts.  Congress  lias  exercised  this  power  fully  in 
both  its  branches ;  it  has  coined  money,  and  still  coins 
it ;  it  has  regulated  the  value  of  foreign  coins,  and  still 
regulates  their  value.  The  legal  tender,  therefore,  the 
constitutional  standard  of  value,  is  established  and  can- 
not be  overthrown.  To  overthrow  it  would  shake  the 
whole  system." 


CHAPTEE  IV. 

TREASUKY   NOTES   AUTHORIZED    UNDER  THE    CONSTITUTION. 

The  Constitution  was  adopted  on  September  17,  ITST, 
and  three  yeai'S  thereafter,  Hamilton,  in  his  report  of 
December  13,  1790,  on  a  national  bank,  said  :  "  The 
emitting  of  paper  money  by  the  authority  of  Government 
is  wisely  prohibited  to  the  individual  States  by  the 
national  constitution  ;  and  the  spirit  of  that  prohibition 
ought  not  to  be  disi-egarded  by  the  Government  of  the 
United  States.  Though  paper  emissions,  under  a  gen- 
eral authority,  might  have  some  advantages  not  applica- 
ble, and  be  free  from  some  disadvantages  M'hich  are  ap- 
plicable, to  the  like  emissions  by  the  States  separately,  3'et 
they  are  of  a  nature  so  liable  to  abuse — and,  it  may  even 
be  affirmed,  so  certain  of  being  abused— that  the  wis- 
dom of  the  Government  will  be  shown  in  never  trusting 
itself  with  the  use  of  so  seducing  and  dangerous  an  ex- 
pedient." Although  notes  of  different  forms  were  issued 
subsequently  by  the  Government  at  various  dates,  some 
of  which  were  receivable  for  all  dues  payable  to  the 
Govei'innent,  no  circulating  notes  were  authorized  to  be 
issued  which  were  payable  on  demand  in  coin,  until  the 
passage  of  the  act  of  July  17,  1861,  which  authorized 
the  issue  of  fifty  millions  of  notes  payable  "  on  demand" 
and  "receivable  in  payment  of  all  public  dues;"  and  no 
circulating  notes  were  authorized,  which  by  the  terms  of 
law  were  made  a  full  legal  tender,  until  the  passage  of 
the  act  of  Februaiy  25, 1SG2,  which  was  nearly  seventy- 
five  years  after  the  adoption  of  the  Constitution.    Some 


20  UNITED  STATES  N02ES. 

of  the  treasury  notes,  issued  since  the  adoption  of  tlio 
Ooiistitntion,  and  previous  to  the  passage  of  the  Legal 
Tender  act,  were  receivahle  for  all  dues  to  the  Govern- 
ment, and  others  not ;  some  were  payable  at  a  fixed  date, 
both  with  and  without  interest ;  some  were  fundable  at 
any  time  after  the  date  of  their  issue,  others  at  a  fixed 
date  in  United  States  bonds. 

During  the  late  civil  war,  treasury  notes  were  also  is- 
sued of  all  these  different  forms,  and  also  notes  payable 
on  demand,  receivable  for  all  dues  to  the  Government, 
and  others  pa^^able  to  bearer,  not  receivable  for  duties  on 
imports,  or  payable  by  the  Government  for  interest  npon 
the  public  debt,  but  in  every  other  respect  a  full  legal 
tender  to  and  by  the  Government,  and  between  the  people 
in  all  payments.  Postage  currency  Avas  also  issued,  re- 
ceivable in  payment  of  all  dues  less  than  five  dollars  ;  and 
fractional  currency,  which  was  "  exchangeable  for  United 
States  notes  "  in  sums  of  not  less  than  three  dollars. 

ISo  notes  were  issued  from  1789  to  1812,  a  period 
of  twenty-three  years.  Kotes  bearing  interest  were 
issned  in  the  years  1812,  1813,  1811:  and  1815,  and  at 
various  dates  from  1837  to  1847.  They  were  again 
issued  in  1857,  and  subsequently,  in  the  years  1860,  18G1 
and  thereafter.  The  periods  for  the  issue  of  these  notes 
may  be  summarized  as  follows  :  first,  the  war  of  1812  ; 
second,  the  financial  crisis  of  1837 ;  third,  the  Mexican 
war;  fourth,  the  financial  crisis  of  1857,  or  during 
the  Buchanan  administration  ;  and  fifth,  the  war  of 
the  rebellion.  It  will  thus  be  seen  that  there  have 
been  four  emergencies  in  which  Congress  has  seen  fit 
to  authorize  interest-beai'ing  notes,  and  only  one  in  which 
it  has  authorized  bills  of  credit  or  circulating  notes  paya- 
ble on  demand  in  lawful  money. 


CHAPTER  Y. 

TREASURY  NOTES  OF  THE  WAR  OF  1812. 

The  original  debt  had,  at  the  beginning  of  1812,  been 
reduced  from  seventy -iive  millions  to  forty-five  millions. 
In  1810  it  was  found  impossible  to  meet  all  of  the  annual 
reduction  of  the  debt  required  by  law  from  the  sinking 
fund,  and  a  temporary  loan  was  authorized  to  make  np 
the  deficiency,  which  amounted  to  $'2,750,000.  This 
loan  was  paid  tlie  next  year.  In  1811,  however,  re- 
com-se  was  had  to  a  loan,  and  the  one  authorized  by 
Congress  for  that  year  was  taken  so  slowly,  that,  in  the 
month  of  May  of  the  following  year  the  Seci-etary  of 
the  Treasury,  for  the  first  time  since  the  adoption  of  the 
Constitution,  recommended  the  issue  of  treasury  notes 
npon  the  following  principle,  viz. :  "  1.  Not  to  exceed, 
in  the  whole,  the  amount  which  may  ultimately  not  be 
subscribed  to  the  loan  ;  that  is  to  say,  that  the  amount 
received  on  account  of  the  loan,  and  that  of  the  treasury 
notes,  shall  not,  together,  exceed  eleven  millions ;  M'liicli 
limits,  therefore,  the  greatest  possible  amount  of  treasmy 
notes  to  less  than  $4,900,000.  2.  To  bear  an  interest  of 
5|  per  cent,  a  year,  equal  to  one  cent  and  one-half  a  cent 
per  clay  on  a  hundred  dollar  note.  3.  To  become  pay- 
able by  the  treasury  one  year  after  the  date  of  their  re- 
spective issues.    4.  To  be,  in  the  meanwhile,  receivable  in 


22  UNITED  STATES  NOTES. 

payment  of  all  duties,  taxes,  or  debts,  due  to  tlie  United 
States."  He  did  not  propose  that  the  notes  should  be 
fundable  in  the  loan  which  they  were  intended  to  re- 
enforce.  This  recommendation  of  Secretary'  Gallatin 
Avas  niade  in  his  letter  of  May  14,  1812,  to  Mr.  Langdon 
Chcves,  chairman  of  the  Committee  of  Ways  and  Means 
of  the  House,  and,  in  conformity  therewith,  a  bill  was 
reported  by  that  Committee  on  June  12,  1812. 

War  was  declared  against  Great  Britain  June  18, 1812. 
The  failure  of  the  loan  "was  due  to  the  fact  that  the 
money  had  to  be  borrowed  from  the  ^'ery  classes  who 
iiad  been  opposed  to  the  Avar ;  therefore,  when  the  bill 
for  authorizing  treasury  notes  was  put  npon  its  passage 
on  June  16,  it  met  with  much  opposition.  It  was 
argued  that  the  notes  under  the  bill  Avere  not  equal  in 
value  to  gold  and  silver,  and  would  not  be  received  by 
the  banks  or  the  people,  who  were  prejudiced  against 
Buch  Government  paper ;  that  if  issued  they  could  not  be 
redeemed,  and  would  depreciate ;  that  the  measure 
would  be  subversive  of  public  and  private  credit ;  that 
it  was  a  confession  of  impaired  credit ;  that  to  allow 
the  notes  to  be  deposited  in  banks  and  to  accept  bank 
paper  in  exchange  was  to  depreciate  the  Government's 
paper ;  that  if  issued,  additional  taxes  should  be  im- 
])Osed  and  set  apart  for  the  redemption  of  the  notes,  as 
in  the  case  of  the  English  exchequer  notes ;  that  the  pro- 
posed notes  Avere  the  same  as  the  old  continental  money, 
and  Avould  depreciate  in  the  same  Avay. 

Others  opposed  the  bill  simply  because  they  opposed 
the  Avar  or  any  preparation  for  it.  In  case  Avar  proved 
unavoidable  the  necessary  funds  should  be  raised  by 
taxes  and  loans.     The  shortness  of  the  time  for  Avhich 


ARG  UMENTS  FOR  AND  A  GAINST  ISSUE  OF  NOTES.  23 

tlie  notes  were  to  be  issued  was  another  objection. 
The  public  revenues  would  not  meet  tlie  engagement, 
and  engagements  shoukl  not  be  entered  into  without  a 
certainty  of  fnliihnent.  Taxes  were  necessary.  It  was 
a  paUry  expedient  never  suggested  by  IlamiUon  or 
Woleott,  and  not  even  the  spontaneous  production  of 
Gallatin  ;  that  the  first  suggestion  of  tlie  latter  "was  to 
authorize  a  loan  on  such  terms  as  would  have  insured 
its  success.  It  was  a  humiliating  spectticle  to  exhibit  the 
Government  failino;  in  nesrotiatino-  its  first  war  loan. 

o  o  o 

On  the  other  hand,  the  supporters  of  the  bill  n)ain- 
tained  that  the  notes  would  be  received  by  the  banks  in 
the  same  manner  as  any  good  individual  paper  was  re- 
ceived. The  banks  would  give  the  Government  credit 
for  them,  and  in  return  the  Government  could  draw  gold 
and  silver  from  the  banks.  The  notes  would  be  even 
more  valuable  to  the  latter  than  specie,  as  they  could  be 
kept  as  an  interest-bearing  reserve.  They  would  have 
currency,  being  receivable  in  duties,  taxes,  and  debts  due 
the  Government,  and,  as  interest  accumulated,  they 
would  increase  in  value.  In  reply  to  the  suggestions 
that  money  should  be  raised  by  taxes,  it  was  stated  that 
when,  previously,  measures  of  that  kind  had  been  pro- 
posed, the  opposition  had  refused  to  consent.  The 
issue  of  treasury  notes,  bearing  interest  at  5-|  per  cent, 
oidy,  did  not  indicate  bad,  but  rather  good  credit.  In- 
dividuals in  good  credit  could  not  borrow  at  less  than  6 
per  ccTit.  Thwe  was  no  de})reciatiou  of  Govei'nment 
paper  in  exchanging  the  notes  for  bardc  paper,  as  the 
latter  was  ready  money,  while  the  foi-mer  were  payable 
one  year  after  date.  It  was  denied  that  the  peo])le  had 
or  would   have   any  prejudice   against   treasury   notes. 


24:  V KITED  STATES  NOTES. 

Tliey  wci-e  not  prejudiced  against  bank  notes,  and  the 
proposed  notes  bearing  interest  bad  many  advantages 
over  bank  paper.  Tlie  proposed  notes  would  be  in  no 
way  inferior  to  exchequer  bills ;  in  fact,  it  was  only 
want  of  credit  that  compelled  the  English  Government 
to  set  aside  certain  revenues  to  meet  the  latter.  The 
treasury  notes  would  have  two  advantages  over  ex- 
chequer bills  :  one,  the  superior  credit  of  the  United 
States,  and  the  other,  that  they  M-ere  receivable  for 
taxes  and  public  dues.  They  were  also  superior  to  pub- 
lic stocks,  in  that,  Mdiile  bearing  interest,  they  also  can 
serve  as  currency,  the  same  as  gold  and  silver,  thus  en- 
hancing the  medium  of  circulation.  There  was  no  re- 
sendilance  between  them  and  continental  money. 
When  the  latter  M-as  issued,  the  Government  was  de- 
pendent on  the  pledges  of  the  several  States  for  its 
revenues,  but  now  its  credit  was  above  suspicion,  its 
power  to  raise  reveime  complete,  and'  its  ability  to  pay 
its  debts  undoubted.  AVar  was  unavoidable.  Both 
loans  and  taxes  would  have  to  be  resorted  to.  The  pro- 
posed notes  were  nothing  but  a  loan  with  extraordinary 
advantages,  taking,  however,  but  little  from  the  circulat- 
ing medium  of  the  country.  In  many  transactions  they 
would  have  all  the  effect  of  money.  ^Yhile  not  secured 
by  any  specific  fund  set  apart  for  their  redemption,  the 
entire  duties  and  taxes  of  the  year  are  indirectly  pledged 
for  this  purpose,  since  they  ai'e  receivable  in  payment 
of  such  duties  and  taxes.  The  revenugs  of  the  3'ear 
were  estimated  at  eight  millions,  and  the  proposed  issue 
of  notes  was  five  millions  only.  The  faith  of  the  Gov- 
ernment was  pledged  for  their  i-edemption.  That  faith 
had  never  been  violated.     The  resources  of  the  Govern- 


FIRST  ISSUES   UNDER  CONSTITUTION,   1812.       25 

nient  wei*e  ample  beyond  those  of  any  other  nation. 
Its  sources  of  revenue  were  unimproved  land,  a  produc- 
tive agriculture,  an  extensive  connnerce,  an  entei'prising 
people,  and  an  unlimited  right  of  taxation.  The  antici- 
pated abuse  of  a  privilege  was  no  argument  against  its 
legitimate  use. 

The  bill  passed  the  House  June  IT,  1812,  yeas  85, 
nays  41.  It  passed  the  Senate  June  20,  and  became  a 
law  June  30,  1812.  By  it  the  Pi'esident  was  autjiorized 
to  issue  treasury  notes  to  an  amount  not  exceeding 
$5,000,000.  Section  two  of  the  first  "  Act  to  authorize 
the  issuing  of  treasury  notes,"  read  as  follows  :  "  That 
the  said  treasury  notes  shall  be  reimbursed  by  the 
United  States,  at  such  places,  respectively,  as  may  be 
expi-essed  on  the  face  of  the  said  notes,  one  year,  re- 
spectively, after  the  day  on  which  the  same  shall  have 
been  issued ;  from  which  day  of  issue  they  shall  bear 
interest  at  the  rate  of  five  and  two-fifths  per  centum  a 
year,  payable  to  the  owner  and  owners  of  such  notes,  at 
the  treasury,  or  by  the  proper  commissioner  of  loans,  at 
the  places  and  times  respectively  designated  on  the  face 
of  said  notes  for  the  payment  of  principal." 

They  were  signed  by  persons  designated  by  the  Presi- 
dent, and  the  compensation  of  these  persons  was  fixed 
at  one  dollar  and  twenty-five  cents  each  for  one  hundred 
notes  signed.  They  were  countersigned  by  the  Com- 
missioners of  Loans  for  the  State  in  which  the  notes  were 
respectively  made  payable.  With  the  approval  of  the 
Pi'esident,  the  Secretary  of  the  Treasuiy^  was  authorized 
to  boj'row  money  upon  the  security  of  the  notes,  and  to 
pay  them  to  such  banks  as  would  give  the  Govei'nment 
credit  for  them  at  par.  When  the  notes  were  paid  to 
2 


26  UNITED  STATES  NOTES. 

collectors  of  revenue  and  receivers  of  public  money,  the 
interest  ceased  on  the  day  of  payment.  The  Commis- 
sioners of  the  Sinking  Fund  wei-e  authorized  to  cause 
the  principal  and  interest  to  be  paid  when  due,  and  to 
purchase  them  at  nut  more  than  par,  in  the  same  way 
as  they  purchased  other  public  securities,  with  a  view  of 
reducing  the  debt.  They  were  made  payable  to  order, 
transferable  by  delivery  and  assignment  on  indorsement 
by  persons  to  whose  order  they  were  made  payable. 
The  notes  wei-e  made  everywhere  receivable  for  duties, 
taxes,  and  in  payment  of  public  land,  at  their  par  value 
with  accrued  interest  on  the  day  paid  in.  Penalties 
were  imposed  for  counterfeiting  them,  and  an  appro- 
priation made  for  the  expense  of  printing  and  preparing 
the  notes. 

There  was  nothing  in  the  law  regulating  the  denomi- 
nations in  which  they  should  be  issued,  but,  as  a  matter 
of  fact,  none  were  issued  of  a  denomination  of  less  than 
one  hundred  dollars.  The  largest  amount  authoi-ized 
under  this  act,  outstanding  at  any  one  time,  was  five 
millions.  The  notes  authorized  were  all  issued  before 
the  end  of  the  year  1813,  and  were  all  redeemed  during 
the  year  1814.  JViles'  Iie^/iste?'  for  July  4,  1812,  in  an 
editorial,  thus  refers  to  the  issue  of  these  notes.  The 
arguments  used  in  favor  of  their  issue  were  almost  pre- 
cisely the  same  as  those  afterward  urged  by  Chase  and 
Fessenden  in  favor  of  the  issue  of  seven-thirty  and  com- 
pound-interest notes : 

"  To  meet  any  possible  exigency  from  a  transient 
failure  of  adecpiate  supplies  to  carry  on  the  war  against 
an  unprincipled  and  inveterate  enemy,  it  has  been  re- 
solved to  issue  certain  notes  from  the  treasury  depart' 


NILE&  REG  1ST EU  FAVORS  TREASURY  NOTES.    27 

iiiont,  to  tlie  amount  of  about  five  niilliou  dollars,  bear- 
ing; interest  of  tive  and  two-fifths  per  cent,  per  annum, 
equal  to,  one  and  one-half  cents  per  day  on  everjMiote 
of  $100 — which  notes  are  to  become  payable  at  the 
treasury'  one  year  after  the  date  of  their  respective 
issues,  and  in  the  meantime  are  receivable  (with  interest 
that  may  have  accumuhited  upon  them)  in  all  payments 
to  be  made  to  the  United  States, 

"  This  plan  appears  the  most  eligible  that  could  possi- 
bly have  been  adopted,  as  it  will  mutually  accommodate 
the  Government  and  the  people,  and  be  advantageous 
to  both.  Yet  attempts  are  niaking  (what  will  not  the 
enemy  attempt  ?)  to  depreciate  the  value  of  this  intended 
emission,  by  comparing  it  with  the  old  continental 
money.  The  pitifnl  design  will  not  avail,  for  though 
treasur}'  notes  to  the  valae  of  five  millions  may  issue, 
the  probability  is  that  a  ten  thousandth  part  of  tlie 
population  of  the  United  States  will  never  see  one  of 
them.  The  whole  will  be  locked  in  the  vaults  of  the 
bank,  or  snugly  put  away  by  individuals  as  soon  as  they 
appear;  because  they  will  be  convertible  into  current 
money  (specie  or  bank  notes)  at  a  moment's  notice,  and 
have  constantly  inci'easing  value.  The  sum  to  be  issued 
is  so  completely  within  the  means  of  the  Government, 
that  these  notes  will  always  bear  a  premium  equal  to 
the  interest  that  may  have  accunmlated  on  them.  The 
city  of  ]S[ew  York  itself,  in  the  com-se  of  one  year 
would  consume  the  whole  emission.  The  proposed  op- 
eration of  these  notes  is  so  perfectly  understood  by  the 
trading  part  of  the  community,  particularly  on  the  sea- 
board, tliat  an  explanation  of  it  may  well  be  thought 
superfluous  ;  but  as  bad  men  may  seize  upon  them  to 


28  UNITED  STATES  NOTES. 

alarm  tlic  i_<i;iioi-ant  and  unsuspecting',  it  appeal's  I'iglit 
Ave  should  offer  a  few  propositions  to  show  their  folly 
and  wickedness.  A  person  receives  of  the  United 
States  $10,000  in  treasury  notes  ;  if  he  has  no  use  for 
tlie  money  for  ten  days,  lie  lays  them  in  his  desk  for 
that  time— the  interest  in  the  interim  amounts  to  $15. 
lie  then  carries  them  to  a  bank  and  deposits  them  with 
other  monies,  for  $10,015,  or  exchanges  them  with  a 
friend  or  neighhor  (and  in  our  seaports  he  can  always 
find  such)  who  has  duties  to  pay  for  that  amount.  Thus 
the  money  is  never  idle,  it  works  night  and  day,  in  the 
language  of  money  lenders,  and  is  constantly  accumu- 
lating. The  hanks  will  he  glad  to  receive  these  notes 
in  exchange  for  their  own  ;  the  advantage  is  on  their 
side,  as  the  treasury  notes  hear  a  daily  interest,  and  their 
own  bear  none  at  all.  If  the  stock  should  rise  to  a 
greater  amount  than  the  bank  may  think  it  advisable  to 
keep,  which  can  hardly  be  possible,  they  are  immedi- 
ately convertible  into  any  kind  of  money  desired,  for 
the  banks  always  have  customers  who  will  use  them  in 
payment  of  bonds  due  the  United  States  for  duties. 
They  are  better  as  deposits  than  specie,  gold,  and  silver, 
for  gold  and  silver  lie  dormant  in  the  vaults,  whereas 
the  treasury  notes  will  be  an  active  capital,  every  hour 
becoming  more  and  moi'e  valuable,  and  as  fully  compe- 
tent to  all  the  purposes  of  the  banks  as  specie,  because 
they  will  produce  it. 

"  From  these  brief  remarks  it  will  appear  evident  that 
treasury  notes,  the  moment  they  are  issued,  will  be 
hoarded  up  by  the  banks,  if  they  can  get  them  ;  and 
very  few  of  us  will  be  alarmed  at  the  sight  of  one  unless 
M'e  seek  it  as  a  matter  of  curiosity." 


ADDITIONAL  ISSUES  IN  1813.  29 

The  Secretary  estimated  that  there  would  Ije  a  deficit 
of  nineteen  millions  for  the  year  1813.  Congress  au- 
thorized sixteeTi  millions  of  this  amount  to  be  obtained 
by  loans,  without  the  usual  provision  that  the  bonds 
should  be  sold  at  par,  or  specifying  the  rate  of  interest. 
The  loan  Avas  placed  with  great  difficult}',  the  sixteen 
millions  authorized  being  obtained  from  the  avails  of 
$18,109,377.43  of  stock,  bearing  interest  at  six  per  cent. 

To  supply  the  remainder,  a  bill  was  introduced  into 
the  House  on  January  27,  1813,  to  authorize  a  new  issue 
of  treasury  notes.  The  bill  was  similar  in  its  provisions 
to  the  act  of  1812  ;  the  arguments  for  and  against  the 
measure  were  in  the  main  the  same  as  those  of  1813. 
The  opposition  complained  that  nnich  favoritism  had 
been  shown  in  the  dealings  with  the  banks.  It  Avas  al- 
leged that  among  the  banks  granting  credit  jn  return 
for  the  treasury  notes  deposited,  as  authorized  by  the 
law  of  1812,  M'ere  those  acting  as  depositaries  of  public 
moneys  derived  from  the  deposits  of  collectors  and  pub- 
lic agents  ;  that  this  very  money  so  deposited  by  the 
Government  agents  was  again  loaned  to  the  Government 
ou  the  credit  of  treasury  notes.  On  the  other  hand,  it 
was  urged  that  the  use  of  banks  as  depositaries  was  un- 
avoidable, and  that,  in  any  event,  banks  would  receive 
incidental  benefit  from  keeping  Government  deposits. 
Even  if  a  stock  loan  was  substituted  for  treasury  notes 
the  money  realized  therefrom  would  be  deposited  with 
the  same  banks  until  required  by  the  Government.  The 
bill  passed  the  House  by  a  vote  of  79  to  41,  and  the  Sen- 
ate by  a  vote  of  17  to  9,  and  became  a  law  on  February  25, 
1813.  The  greatest  amount  of  notes  authorized  by  this 
act,  outstanding  at  anyone  time,  was  five  millions;  they 


30  UNITED  STATES  NOTES. 

v:oro  all  I'cdcemnble  by  the  first  quarter  of  ilic  calendav 
year  of  1815,  but  at  the  close  of  that  quarter  only 
81,483,900  had  been  redeemed,  and  all  of  the  remainder 
was  not  finally  paid  until  the  year  1820,  although  the 
gi'catest  portion  was  called  in  by  ISIT.  They  M'ere  is- 
sued in  denominations  of  not  less  than  ^100. 

An  act  similar  in  all  respects  to  that  of  February  25, 

1813,  passed  the  House  by  vote  of  83  to  48,  and  the  Senate 
without  debate,  on  March  1,  and  was  approved  March  4, 

1814.  It  authorized  the  issue  of  five  millions  of  treasury 
notes,  and  of  an  additional  five  millions,  which,  if  issued, 
was  to  be  considered  as  part  of  a  stock  loan  for  the  year, 
which  was  subsequently  to  be  authorized.  This  loan  for 
twenty -five  millions  was  authorized  on  March  24th  of  the 
same  year,  and  could  only  be  placed  at  a  laige  discount. 
An  additional  five  millions  was  therefore  issued  in  place 
of  an  equal  amount  of  stock,  making  in  all  ten  millions 
of  treasury  notes  issued  undei-  this  act.  These  notes 
were  for  the  first  time  issued  in  denominations  of  less 
than  8100,  notes  of  the  denomination  of  twenty  dollars 
being  placed  in  circulation.  The  whole  ten  millions 
were  issued  previous  to  June  30,  1815.  The  policy  of 
Congress  seemed  to  be  to  keep  the  authorized  issue  of 
treasnr}^  notes  each  year  below  the  amount  of  the  reve- 
nue of  the  year,  or,  if  more  was  authorized,  they  were  to 
be  in  lieu  of,  and  to  re-enforce,  stock  loans. 

On  December  26,  1814,  an  act  was  passed  which 
authorized  the  issue  of  8T,500,000  of  treasury  notes  in 
place  of  portions  of  the  loans  of  March  24th  and  jS'ovem- 
ber  15th  not  already  placed,  and  three  millions  moi-e  for 
the  expenses  of  the  War  Department.  These  notes  bore 
the  sauic  rate  of  interest  and  Mere  for  the  same  time  as 


LEGAL  TENDER  A  "■  DESPERATE  EXPEDIENT."    31 

tliose  of  the  act  of  June  SO,  1812,  and  nndor  this  act 
$8,318,400  of  notes  were  issued,  a  portion  of  which  was 
in  tlie  denominations  of  twenties  and  fifties. 

On  Au[2;nst  31,  lSl-4,  specie  payments  were  suspended 
except  in  Kew  England.  The  accounts  of  tlie  Treasury- 
Department  sliow  that  tliere  were  outstandhig  on  Sep- 
tember 30,  1814,  $10,649,800  of  treasury  notes.  Mr. 
Crawford  was  succeeded  in  October  by  Secretary  DaUas, 
and  the  latter,  in  his  report  to  tlie  Committee  of  Ways 
and  Means  on  October  17,  1814,  said  the  condition  of  the 
circulating  medium  presented  another  copious  source  of 
mischief  and  embarrassment.  The  stock  of  specie  was 
diminished  by  exportation,  and  by  its  withdrawal  into 
the  private  coffers  of  individuals.  The  multiplication  of 
banks  had  increased  the  paper  currency,  so  that  it  was 
difficult  to  calculate  its  amount,  and  still  more  difficult 
to  ascertain  its  value.  Baidv  cuiTency  was  of  no  beneiit 
since  the  suspension  of  specie  payments,  and  tliere  virtu- 
ally existed  no  circulating  medium  common  to  all  the 
citizens  of  the  United  States.  The  money  transactions 
of  private  individuals  were  at  a  stand,  and  the  fiscal  opera- 
tions of  the  Government  labored  with  extreme  inconven- 
ience. Under  favoi-able  circumstances,  the  limited  issue 
of  treasury  notes  would  probably  aiford  relief,  but  they 
were  an  expensive  and  precarious  substitute  for  coin  or 
bank  notes,  lie  concluded  by  recommending  the  estab- 
lishment of  a  national  bank,  and  added  :  '"  But  whether 
the  issues  of  paper  currency  proceed  from  the  national 
treasury,  or  from  a  national  bank,  the  acceptance  of  the 
paper  in  a  course  of  payments  and  receipts  must  be  for- 
ever optional  with  the  citizens.  The  extremity  of  that 
day  cannot  be  anticipated,  when  any  honest  and  enlight- 


32  UNITED   STATES  NOTES. 

enod  statcsinnii  ^\  ill  again  venture  npon  the  desperate 
expedient  of  a  tender  law."  This  statement  was  called 
out  hj  a  report  made  by  Mr.  Eppes,  Chairman  of  the 
Committee  of  Ways  and  Means  of  the  House,  on  Octo- 
ber 10,  1814,  in  which,  in  order  to  secui-e  the  circulation 
of  treasury  notes,  it  was  recommended  that  notes  of  small 
denominations  should  be  issued,  to  be  funded  into  8  per 
cent,  stock,  payable  to  bearer,  and  transferred  by  deliv- 
ery, receivable  in  all  payments  for  public  lands  and  taxes. 
The  internal  i*evenue  taxes  were  to  be  pledged  for  pay- 
ment of  interest,  and  they  were  to  be  exchangeable  for 
stock  at  8  per  cent.,  or  redeemable  in  specie  after  six 
months'  notice  from  the  Government. 

On  November  24,  1814,  in  a  report  to  the  committee 
to  which  a  bill  for  establishing  a  national  bank  had 
been  referred,  Mr.  Dallas  mentions,  as  one  of  tlie  means 
at  the  disposal  of  the  Treasury,  the  issue  of  treasury 
notes,  "  which  none  but  necessitous  creditors,  contractors 
in  distress,  or  Government  agents  acting  officially  M'cre 
willing  to  accept."  He  also  states  that  the  act  of  Ko- 
vember  15,  1814,  authorizing  treasury  notes  to  be  taken 
in  payment  for  subscriptions  to  loans,  Avas  passed  too 
late  ;  that  the  interest  on  the  public  debt  had  not  been 
punctually  paid,  and  that  a  large  aniount  of  treasuiy 
notes  had  already  been  dishonored.  In  a  subspquent 
connnunication  of  December  14,  1814,  he  said  that  the 
non-payment  of  treasury  notes,  and  the  lisk  of  not  pay- 
ing the  interest  on  the  funded  debt,  were  chiefly  owing 
to  the  suspension  of  specie  payments  by  the  banks,  and 
the  consequent  impracticability  of  transferring  public 
funds  from  the  place  where  they  were  deposited  to  the 
place  where  they  were  needed.   The  difficulty  referred  to 


LEGAL  TEKDER  FLRST  PROPOSED  73"  CONGRESS.    33 

in  meeting  the  interest  upon  the  public  del)t  was  in  Bos- 
ton. A  State  bank  liad  hirge  Government  deposits,  and  a 
draft  was  sent  to  meet  the  interest,  upon  October  1,  1814. 
Tlie  State  bank  declined  paying  in  coin  or  bank  notes, 
and  the  creditors  refused  to  receive  the  treasury  notes 
tiiat  were  offered  instead.  After  the  suspension,  the 
Government  was  deprived  of  the  use  of  specie,  and  as 
the  banks  in  each  State  refused  credit  and  circulation  to 
the  notes  of  banks  in  other  States,  no  transfer  of  funds 
could  be  made  to  places  where  they  were  wanted  to 
meet  treasury  notes  ;  consequently  the  credit  of  these 
notes  was  lessened,  and  creditors  refused  to  accept  them 
in  payment. 

On  November  12,  1814,  Mr.  Hall,  of  Georgia,  intro- 
dnced  in  the  House  a  series  of  five  resolutions  to  revive 
the  credit  of  treasury  notes.  The  second  resolution  pro- 
vided that  the  notes  should  be  a  legal  tender  between 
citizens,  and  between  citizens  and  foreigners,  for  all  debts 
then  due  or  afterward  to  become  due,  which  the  House 
refused  to  consider  by  a  vote  of  95  to  42 — more  than 
two-thirds.  These  resolutions  were  evidently  introduced 
as  measures  in  opposition  to  the  proposition  for  a  na- 
tional baidc,  and  the  other  four  resolutions  were  subse- 
quently laid  upon  the  table  by  a  large  majority. 

On  January  30,  1 815,  a  bill  authoi-izing  the  issue  of 
treasury  notes  in  accordance  with  the  recommendations 
of  Secretary  Dallas  in  his  communication  of  January 
ITtli,  was  introduced  in  the  House  and  referred  to  the 
Connnittee  of  the  Whole.  The  bill  passed  the  House 
February  11th,  and  the  Senate  February  21st,  and  was 
approved  February  24,  1815  ;  it  was  the  last  of  a  series 
of  five  acts,  connnencing  with  that  of  June  30,  1812,  the 
2* 


^•i  UNITED  STATES  NOTES. 

first  fonr  of  M-liieli  had  authorized  the  issue  of  treasury 
notes  hcai'i ng  interest  at  the  rate  of  5|  per  cent.  The 
forui  of  the  large  notes  issued  nnder  this  act,  which  iii 
size  were  7f  by  3f  inclies,  is  shown  on  tlie  next  page. 

This  act  authorized  the  issue  and  reissue  of  treasury 
notes  to  an  amount  not  exceeding  twenty-five  millions, 
upon  principles  essentially  different  from  those  govern 
ing  prior  issues.  These  notes  might  be  of  &nj  denomi- 
nation :  if  of  a  denomination  less  than  $100,  they  were 
designated  as  "  small  treasury  notes,"  were  payable  to 
bearer,  and  bore  no  interest ;  if  of  a  denomination  of 
$100  or  upward,  they  were  payable  to  order,  transferable 
by  indorsement,  and  bore  interest  at  the  same  rate  as 
those  of  $100  and  upward  previously  authorized.  The 
form  of  the  "small  treasury  notes,"  in  size  6^  by  3 
inches,  is  shown  on  page  36. 

These  notes  were  not  chargeable  upon  the  sinking  fund, 
as  in  the  case  of  the  first  three  acts  of  the  series,  nor 
were  they  payable  out  of  any  money  in  the  treasury  not 
otherwise  appropriated,  as  in  the  previous  act  of  Decem- 
ber 26,  1814,  but  rested  entirely  upon  the  provision 
making  them  fundable  into  stock.  The  principal  and 
interest  were  not  payable  at  any  specified  time,  but  the 
notes  were  everywhere  receivable  in  all  payments  to  the 
United  States.  The  act  reduced  the  pay  of  those  sign- 
ing the  notes  to  seventy -five  cents  for  each  one  hundred 
notes,  and  also  provided  that  treasury'  notes  of  previous 
issue  should  be  fundable  into  6  per  cent,  stock.  The 
holders  of  the  small  treasury  notes  could  exchange  them 
at  pleasure,  in  sums  of  not  less  than  $100,  for  certificates 
of  funded  stock  bearing  interest  at  7  per  cent.  The 
treaty  of  peace  was  signed  on  December  14,  1814,  but 


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TOTAL  NOTES  ISSUED  DURING  WAR  OF  1813.      o1 

tlie  news  reached  Washington  a  few  davs  only  before 
the  passage  of  the  bill,  which,  althongh  a  war  measure, 
was  cari'ied  through,  inasmuch  as  it  was  considered 
necessary  to  the  regulation  of  the  disordered  finances  of 
the  country.  The  whole  amount  of  treasury  notes,  ab- 
solute and  contingent,  which  was  authorized  by  these 
five  acts,  was  $60,500,000,  of  Mdiich  amount  $36,680,794 
was  issued.  The  following  table  exhibits  the  amount 
issued  under  each  act : 

Under  act  of  June  30,  1812 $5,000,000 

Under  act  of  February  25,  1813 5,000,000 

Under  act  of  March  4,  1814 10,000,000 

Under  act  of  December  26, 1814 8,318,400 

Under  act  of  February  24, 1815— $100  notes.  ,$4,969,400 
Under  act  of  Febriiary  24,  1815 — small  treas- 
ury notes 3,392,994 

8,362,394 

Total  amount  issued $36,680,794 

Although  the  treasury  notes  of  1815  of  small  denomi- 
nations, originally  issued,  amounted  to  only  $3,392,1)0-1, 
the  law  made  them  fundable  into  7  per  cent,  stock, 
payable  after  December  31st;  and  as  the  notes  were  rc- 
issuable,  the}^  were,  under  various  exigencies,  again  and 
again  paid  out,  until  the  whole  amount  of  the  7  per 
cent,  stock  issued  for  the  purpose  of  funding  them, 
amounted  to  $9,070,386.  On  account  of  the  high  rate 
of  interest  of  these  bonds,  the  small  treasury  notes  were 
in  demand,  and  a  small  amount  was  sold  at  a  premium 
of  4  per  cent.,  and  $1,365,000  at  a  premium  of 
$32,107.64,  or  about  2|  per  cent.  The  Secretary,  in 
his  annual  report  for  1815,  says  :   "  The  treasury  notes, 


38  UNITED  STATES  NOTES. 

Mliicli  wore  issued  under  act  passed  previous  to  February 
24,  1815,  were,  for  the  most  part,  of  a  denomination  too 
iiigli  to  serve  as  a  current  medium  of  exchange  ;  and  it 
was  soon  ascertained  that  the  small  treasury  notes, 
fundable  at  an  interest  of  1  per  cent.,  though  of  a  con- 
venient denomination  for  common  use,  would  be  con- 
verted into  stock  almost  as  soon  as  they  Avere  issued."  ' 
The  notes  of  Si^lOO  and  upward,  though  fundable  into  6 
per  cent,  bonds,  were  depreciated  from  8  to  10  per  cent, 
below  bank  notes,  which  bore  no  interest,  but  were  re- 
deemable in  specie. 

In  recapitulation,  it  may  be  stated  that  the  treasury 
notes  of  the  period  of  the  war  of  1812  w-ere  issued  under 
five  acts  of  Congress,  as  stated  in  the  table.  The  notes 
of  the  first  three  acts  were  made  chargeable  to  the  sink- 
ing fund — those  of  the  last  two,  not ;  those  of  the  first 
two  acts  were  in  denominations  of  not  less  than  $100  ; 
those  of  the  next  two  were  not  less  than  $20  ;  and  those 
of  the  last  act  were  in  denominations  of  |3,  $5,  $10,  $20, 
$50,  $100  and  upward.  Those  of  the  first  three  acts 
were  not  originally  fundable  into  stock,  but  were  made 
so  by  the  act  of  jS'ovember  15,  1814,  and  by  the  subse- 
quent act  of  February  24,  1815.  The  notes  of  the  acts 
of  December  2G,  1814,  became  fundable  by  the  act  of 
Febi'uary  24,  1815,  but  those  of  the  last-named  act  were 
fundable  by  the  terms  of  their  authorization.  The  notes 
of  all  the  acts  but  the  last  were  made  payable  one  year 
from  the  date  of  their  issue  ;  those  of  the  last  act  were 
payable  at  no  fixed  date.  All  of  these  notes  (with  the 
exception  of  the  small  treasury  notes,  wliich  were  with- 

'  Report  of  tlie  Secretary  of  the  Treasury,  1815,  p.  26. 


DEPRECIA  TION  OF  GOVERNMENT  LOANS,  1812-1815.    30 

out  interest)  bore  interest  at  the  rate  of  5f  per  cent. 
Kone  were  in  the  form  of  a  promise  to  paj  coin  on  de- 
mand, bnt  all  in  the  form  of  a  receipt  for  all  dues  pay- 
able to  the  Government.  IS^one  of  these  notes  had  any 
legal  tender  quality,  and  Congress,  without  debate,  re- 
jected the  only  proposition  made  to  give  them  this 
quality.  The  denominations,  except  in  the  case  of  the 
small  notes  of  1815,  were  too  large  for  general  circulation, 
and  the  inducements  for  funding  the  latter  were  so  great 
that  they  were  speedily  funded  into  seven  per  cent,  bonds. 
As  long  as  the  banks  redeemed  their  notes  in  specie,  treas- 
ury notes  appear  to  have  been  kept  at  par,  bnt  when 
specie  payments  were  suspended,  they  began  to  depreci- 
ate, but  were  kept  from  great  discount  by  the  funding 
acts  of  l^ovember  25,  1814,  and  February  24, 1815.  It 
is  said,  "  that  of  eighty  millions  of  loans  negotiated  by 
the  Government  during  this  period,  the  avails  were 
only  tliirty-four  millions,  after  deducting  discounts  and 
depreciations.'"  After  the  close  of  the  war,  in  Decem- 
ber, 1814,  these  notes  were  rapidly  funded. 

'  Report  of  Committee  of  Ways  and  Means,  April  13,  1830. 


CHAPTER  VL 

fEEASUET   NOTES  OF   THE  PERIOD  OF   THE  FINANCIAL    CRISIS 

OF  1837. 

In  anticipation  of  a  large  surplus,  Congress,  by  act  of 
June  23,  1836,  provided  for  the  distribution  of  a  large 
amount  of  Government  money  among  the  States  in  pro- 
portion to  their  representation  in  the  Senate  and  House 
of  Representatives,  and  three  instalments,  amounting  in 
all  to  $27,063,130,  were  so  distributed.'  In  the  mean- 
time, about  May  1, 1837,  specie  payments  were  suspended, 
owing  to  the  great  depression  in  commercial  circles.  An 
extra  session  of  the  25th  Congress  was  called  in  Septem- 
ber of  the  same  year.  The  charter  of  the  second  Bank 
of  the  United  States  had  expired  on  March  4,  1836,  and 
on  June  23,  1836,  Congress  had  passed  an  act  authoriz- 
ing*and  regulating  the  deposit  of  public  moneys  in  State 
banks.  J^o  action  was  taken  during  the  exti-a  session 
toward  rechartering  the  Bank  of  the  United  States. 
The  distribution  of  the  fourth  instalment  to  the  States 
was,  however,  postponed,  but  the  Secretary  was  pro- 
hibited from  calling  for  any  of  the  money  already  dis- 
tributed without  special  authority  from  Congress,  which 
has  not,  up  to  the  present  date,  been  given. 

The  revenues  for  the  year  (1837)  were  from  six  to  ten 

'  See  page  180. 


DISCUSSION  OF  TREASURY  NOTE  BILL,  1837.     41 

millions  short  of  the  expenditures.  The  public  funds 
already  deposited  with  the  States  were  unavailable,  and 
there  was  another  instalment  to  be  deposited  on  Octo- 
ber 1st.  The  Secretary  recommended  the  withholding  of 
this  instalment,  and,  in  order  to  supply  currency,  an  is- 
sue of  treasury  notes,  the  small  denominations  to  bear 
no  interest,  and  the  large  M^ith  interest. 

A  large  party  in  Congress  w^ere  in  favor  of  recharter- 
ing  the  Bank  of  the  United  States.  The  advocates  of 
treasury  notes  urged  the  issue  principally  upon  the 
ground  of  necessity,  tliere  being  no  currency  upon  which 
the  Government  could  rely  to  make  and  receive  pay- 
ments. Many  w^ere  in  favor  of  a  substitute  to  be  issued 
by  the  proposed  new  Bank  of  the  United  States.  A 
bill  was  presented  and  passed  by  the  Senate.  When  it 
came  to  the  House,  objection  was  made  that  it  was  a 
money  bill,  which  the  Senate  had  no  constitutional  right 
to  originate.  This  point  was  not  discussed,  but  the 
Committee  of  Ways  and  Means  presented  their  own  bill, 
by  which  the  issue  of  ten  millions  in  treasury  notes  was 
authorized.  The  bill  encountered  much  oj^position,  par- 
ticularly from  those  in  favor  of  authorizing  a  new  bank, 
but  passed  the  House  on  October  9,  1837,  by  a  vote  of 
127  to  08,  which  was  a  strict  party  vote.  In  the  Senate, 
the  next  day,  Mr.  Benton  moved  to  make  the  lowest  de- 
nomination of  notes  8100,  instead  of  $50,  as  provided  in 
the  bill.  He  presented  strong  objections  to  the  issue  of 
treasury  notes.  Nothing  but  the  fact  that  the  Govern- 
ment nmst  otherwise  stop  for  M^ant  of  funds,  would  in- 
duce him  to  vote  for  paper  money  in  time  of  peace. 
He  pai'ticularly  ol)jected  to  the  policy  of  reducing  the 
denominations  of  paper  currency.     It  was  the  most  dan- 


42  UNITED  STATES  NOTES. 

gerous  feature  of  the  system,  and  would  diivc  all  specie 
froin  circulation.  Mr.  Clay  spoke  in  favor  of  Mr.  I3eu- 
ton's  motion,  and  characterized  the  M-hole  measure  to  be, 
to  all  intents  and  pui'poses,  a  great  hank  experiment,  and 
alluded  to  the  inconsistency  of  issuing,  in  time  of  pro- 
found peace,  ten  millions  additional  notes  after  decrying 
the  banks  for  enlarging  their  circulation.  Mr.  Webster 
favored  Mr.  Benton's  motion.  It  was  lost  by  a  vote  of 
25  to  16.  The  bill  then  passed  by  a  vote  of  85  to  6, 
both  Mr.  Benton  and  Mr.  Webster  voting  for  it,  and  Mr. 
Clay  against  it.  This  bill  authorized  the  issue  of  treas- 
ury notes  to  an  amount  not  exceeding  ten  millions,  and 
in  denominations  not  exceeding  fifty  dollars.  The  in- 
terest was  not  to  exceed  6  per  cent ;  and  they  were  to  be 
j)ayable,  principal  and  interest,  after  one  j-ear  from  date, 
and  were,  for  the  first  time,  signed  by  the  Treasurer  and 
countersigned  by  the  Begister.  They  M^ere  to  be  issued 
in  payment  of  the  debts  of  the  United  States  to  any 
creditor  who  would  receive  them,  and  were  to  be  re- 
ceivable in  payment  of  all  debts  and  dues  to  the  Gov- 
ernment. They  were  not  reissuable,  and  the  authority 
to  issue  terminated  December  31,  1838.  The  ten  mil- 
lions authorized  M'ere  issued  by  Secretary  Woodbury 
previous  to  July  1,  1838.  About  two  millions  were  is- 
sued at  the  nominal  rate  of  interest  of  1  mill  per  cent.; 
three  millions  at  2  per  cent.;  and  over  four  millions  at 
5  per  cent.  On  account  of  the  low  rate  of  interest 
upon  a  large  portion  of  the  notes,  the  object  for  which 
they  were  issued,  namely,  to  supply  a  circulating  me- 
dium, was  thwarted,  for  they  were  soon  presented  in 
payment  of  taxes,  and  over  five  millions  were  retired  be- 
fore the  whole  amount  had  been  issued. 


SECOND  PROPOSniON  OF  LEGAL   TENDER.      43 

At  the  end  of  1837  the  Secretary  estimated  tliat  the 
balance  in  the  treasury  for  July,  1838,  would  be  $34,- 
187,000,  of  which  $28,101,644  was  due  from  the  States, 
$1,100,000  due  chiefly  from  insolvent  banks,  and  $3,500,- 
000  from  other  banks,  payment  of  which  was  postponed. 
These  sums,  and  the  bullion  fund  in  the  mint,  reduced 
the  estimated  available  balance  in  July,  1838,  to  about 
one  million.  This  estimate  was  nearly  correct,  for  Con- 
gress was  advised  by  the  President,  in  May,  1838,  that 
only  $210,000  of  available  funds  remained  in  the  treas- 
ury. There  were  several  propositions  iu  the  House,  one 
of  which  was  a  bill  for  authorizing  loan  certificates,  which 
should  be  a  legal  tender  to  public  creditors,  but  not  re- 
ceivable for  dues  to  the  Government.  The  question  of 
the  legal  tender  was  not  discussed.  Mr.  Cambreleng,  of 
JSTew  York,  from  the  Committeeof  Ways  and  Means,  re- 
ported a  short  bill,  authorizing  the  issue  of  treasury  notes 
to  the  amount  of  the  issue  of  October,  1837,  which  had 
been  redeemed  and  cancelled.  The  interest  upon  the 
issues  already  made  under  the  laws  of  1837  had  been  too 
small,  and  they  had  been  immediately  paid  into  the  treas- 
ury when  due.  There  were  gratifying  signs  of  a  revival 
of  prospei'ity.  The  Northern  banks  had  resumed  specie 
payment  sooner  than  expected.  This  he  ascribed  to  the 
firmness  of  the  President  in  refusing  to  allow  dues  to  the 
United  States  to  be  paid  in  notes  of  banks  not  paying 
specie.  He  referred  to  the  passage  of  the  Free  Banking 
act  of  New  York  as  a  presage  of  sound  banking  in  future. 
He  also  urged  the  necessity  of  providing  notes  to  enable 
the  treasury  to  meet  its  payment.  The  objections  to  the 
bill  were  much  the  same  as  those  urged  in  the  debate  dur- 
ing the  previous  session,  though  they  were  presented  with 


4-i  UNITED  STATES  NOTES 

inoi-G  force  and  completeness,  particiilarlj  by^Mr.  Caleb 
Cushing.  Ho  said  that  sncli  issues  Mere  bills  of  credit 
not  wari-anted  by  the  Constitution  ;  that  they  were  based 
only  upon  the  faith  of  the  Government ;  that  such  meas- 
ures were  considered  of  doubtful  and  dangerous  charac- 
ter by  all  the  friends  of  democratic  institutions  ;  and  that 
Madison  and  others  had  always  been  opposed  to  the  issues 
of  Government  paper  founded  not  on  funds  or  specie, 
but  only  upon  faith  or  credit,  and  only  consented  to  its 
expediency  in  remarkable  exigencies.  Experience  had 
shown,  that  whatever  interest  they  might  bear,  Avhether 
1  mill  or  G  per  cent.,  they  would  not  be  above  the  value 
of  the  notes  of  good  banks.  It  was  said  that,  if  the 
United  States  under  the  Constitution  co«uld  issue  these 
bills,  so  could  the  States.  They  were  the  same  as  con- 
tinental money,  although  bearing  interest.  Much  of  the 
currency  issued  by  the  States,  during  the  revolution,  de- 
nominated bills  of  credit,  bore  interest.  Ciiief  Justice 
Marshall's  definition'  of  bills  of  credit  was,  "paper  issued 
by  the  sovereign  authority,  and  intended  to  circulate  as 
money."  These  notes  are  issued  by  sovereign  authority, 
and  intended  to  circulate  as  money.  They  operate  un- 
equally, and  afford  no  general  relief;  they  are  below  par 

'  The  Supreme  Court  of  the  United  States  in  a  famous  case,  Briscoe 
vs.  Bank  of  Kentucky,  11  Pet.,  257,  held  that  a  note  of  circulation 
"  issued  by  a  State,  involving  the  faith  of  the  State,  and  designed  to 
circulate  as  money  on  the  credit  of  the  State,  in  the  ordinary  course 
of  business,"  is  a  bill  of  credit.  Other  decisions  of  the  Supreme 
Court— Craig  rs.  Missouri,  4  Pet.,  410  ;  Byrne  vs.  Missouri,  8  Pet.,  40 — 
hold  "that  certificates  is.^ued  by  a  State  in  sums  not  exceeding  ten 
dollars  nor  less  than  fifty  cents,  receivable  in  payment  of  taxes,  the 
faith  and  credit  of  the  State  being  pledged  for  their  redemption,  are 
bills  of  credit  within  the  prohibition  of  the  Constitution." 


MARSHALL'S  DEFINITION  OF  BILLS  OF  CREDIT.    45 

in  Xew  York,  and  at  5  per  cent,  pi-emium  in  Charleston. 
The  bill  was  amended  to  obviate  some  technical  objec- 
tions, and  finally  passed  by  a  small  majority,  106  to  99, 
on  May  16, 1838,  It  came  np  in  the  Senate  on  May  18th. 
Wright,  of  New  York,  Benton,  Calhoun,  Brown,  and  Tal- 
madge  were  in  favor  of  it.  Webster,  Clay,  Crittenden, 
and  Preston  were  on  the  other  side.  The  discnssion 
took  a  wide  range,  involving  the  causes  of  the  condition 
of  the  treasury,  and  the  constitutionality  of  the  issue  of 
treasury  notes.  It  passed  by  a  vote  of  27  to  13,  and  was 
approved  on  May  21,  1838.  Nearly  five  millions  wei'e 
issued  within  one  month  after  the  passage  of  the  bill, 
which  showed  conclusively  the  pressing  needs  of  the 
treasury.  Under  the  previous  acts  of  October,  1837,  and 
May  21,  1838,  the  authority  to  issue  treasury  notes  ex- 
pired on  January  1,  183*J.  The  whole  issue  was  not  to 
exceed  ten  millions,  and  the  latter  act  permitted  the  re- 
issue of  those  paid  in. 

The  whole  amount  which  had  been  issued  to  Decem- 
ber, 1838,  was  $15,709,801.01,  with  interest  as  follows: 
$6,888,809.60  at  6  per  cent. ;  $4,280,273.72  at  5  per 
cent. ;  $2,784,844.73  at  2  per  cent.  ;  and  $1,755,881.96 
with  interest  at  1  mill  per  cent.  There  had  been  re- 
deemed, np  to  the  same  date,  $7,955,250,  leaving 
$7,754,560  outstanding.  The  authority  to  reissue  ex- 
pired with  the  year.  On  January  1,  1839,  there  was 
a  large  amount  of  notes  in  the  treasury,  which  con- 
tinued to  grow  larger  nntil  March  2,  1839,  when  an  act 
was  passed,  extending  the  authority  to  reissue  until  June 
30,  1839,  provided  the  whole  amount  outstanding  did 
not  exceed  ten  millions.  In  December,  1839,  Secretary 
Woodbury  reported  that  at  no  time  had  more  than  ten 


46  UNITED  STATES  NOTES. 

millions  been  outstanding,  and  that  the  amonnt  ont- 
standiiig  was  less  than  the  amount  due  from  suspended 
banks,  and  from  the  Pennsylvania  bank  of  the  United 
States,  to  the  Government,  and  that  the  principal  and 
interest  on  the  treasury  notes  had  always  been  promptly 
paid  when  desired. 

A  bill  was  subsequently  presented  by  Mr.  Jones, 
Chairman  of  the  Connnittee  of  Ways  and  Means, 
Amendments  were  oft'ei-ed  requiring  that  the  notes 
should  bear  interest  at  not  less  than  2  per  cent.,  and 
making  them  negotiable  and  transferable  only  by  in- 
dorsement, in  the  same  manner  as  bills  of  exchange :  the 
first  to  prevent  the  issuance  of  notes  at  the  nominal  rate 
of  1  mill  per  cent.,  or  one-thousandth  of  1  per  cent,  per 
annum,  and  the  second  to  prevent  their  circulation  as 
money,  and  both  to  cure,  as  was  alleged,  the  constitu- 
tional difficulty  which  pertained  to  bills  of  credit  issued 
by  sovereign  authority  and  intended  to  circulate  as 
money.  The  Whigs  refused  to  vote,  leaving  no  quorum. 
On  March  24,  1840,  the  House  continued  in  session 
from  ten  o'clock  until  five  p.m.  of  the  next  day.  Finally, 
when  the  House  adjourned,  the  consideration  of  the 
bill  was  fixed  for  the  following  Friday,  and  on  that  day 
— March  27, 1840 — it  finally  passed  the  House  by  a  vote 
of  110  to  QQ.  It  passed  the  Senate  on  March  30,  1840, 
and  was  approved  the  following  day.  On  page  47  is 
the  form  of  a  $100  note  issued  under  this  act.  On  each 
end  of  the  reverse  were  printed  the  figures  100.  Under 
this  act  the  issues  amounted  to  87,114,251.  Xotes 
were  to  be  ]-edeemed  sooner  than  one  year,  if  the  condi- 
tion of  the  treasury  would  admit,  and  at  any  time  with* 
in  the  year,  after  sixty  days'  notice. 


^ 

^ 


^ 


^ 

^ 


« 


^ 


^ 


^3.-^ 


Si 


"to 


Si 


REPORT  OF  SECRETARY  EWINO.  49 

The  Secretaiy,  in  his  report  for  1840,  states,  that 
treasury  notes  had  been  at  par  during  the  year,  although 
never  bearing  interest  higher  than  5|-  per  cent.,'  and 
subject  to  payment  after  sixty  days'  notice.  To  meet 
the  wants  of  tlie  treasury,  a  treasury  note  bill  was  intro- 
duced, and  passed  Congress  on  February  15, 1841.  This 
law  authorized  an  issue  of  notes,  in  the  aggregate,  of 
$10,000,000,  one-half  to  be  issued  in  payment  of  amounts 
due  and  payable  prior  to  March  4, 1841,  and  the  remain- 
ing $5,000,000  in  payment  of  amounts  due  and  payable 
after  that  date.  In  all,  $7,529,063  were  issued  under 
act  of  February  15,  1841. 

In  the  fall  of  1840,  Harrison  had  been  elected  Presi- 
dent to  succeed  Yan  Buren,  but  died  April  4,  1841. 
He  was  the  representative  of  the  Whig  party,  which  had, 
since  the  year  1837,  so  bitterly  opposed  the  issue  of 
treasury  notes.  Mr.  Ewing,  of  Oliio,  was  appointed  Sec- 
retary of  the  Treasury  by  President  Harrison,  In  his  re- 
port to  Congress  at  its  special  session  of  May  31,  1841, 
he  said  that,  from  January  1,  1837,  to  March  4,  1841, 
the  expenditures  of  the  Government  had  exceeded  the 
revenues  by  over  $31,000,000.  Of  about  twenty-six 
millions  of  treasury  notes  issued  under  the  acts  from 
October  12,  1837,  to  February  15,  1841,  inclusive,  all 
but  about  six  millions  had,  as  claimed  by  Secretary 
Woodbury,  been  issued  in  anticipation  of  revenues,  or 
upon  the  basis  of  existing  debts  due  to  the  United  States, 
leavino;  about  six  millions  outstandino;  when  the  new  ad- 
ministration  came  in.  Mr.  Ewing  estimated  that  the 
deficit  in  the  revenues  for  the  year  1841,  after  meet- 

'  Finance  Report,  vul.  iv.,  p.  354. 
3 


50  UNITED  STATES  NOTES. 

m^  the  current  expenses  and  redeeming  the  treasury 
notes  tlien  outstanding  and  to  he  issued,  would  he 
^12,088,215,  wliieh  he  considered  to  he  tJie  amount 
of  the  puhlic  deht.  lie  ohjected  to  the  issue  of  treas- 
ury notes,  and  recommended  a  loan  redeemable  after 
eight  years  or  upon  six  months'  notice  hy  the  Govern- 
ment. 

A  bill  was  introduced  by  Millard  Fillmore,  Chairman 
of  the  Committee  of  Ways  and  Means,  on  June  2-lth.  It 
provided  a  loan,  payable  after  January  1,  1S5G,  with  in- 
terest at  5  per  cent.,  and  authority  was  given  the  Seci'e- 
tary  to  purchase  the  bonds  out  of  any  surplus  in  the 
treasury.  It  was  objected  that  the  loan  was  unnecessary, 
and  that  it  was  the  commencement  of  a  scheme  to  or- 
ganize a  national  bank.  The  debate  was  bitterly  politi- 
cal. It  was  urged,  that  as  this  was  an  administration 
measure,  the  loan  should  be  paid  within  the  term  of  the 
administration.  This  point  was  foolishly  conceded,  but 
the  rate  of  interest  M-as  raised  to  G  per  cent.  As  thus 
amended  the  bill  became  a  law  on  July  21,  ISil.  The 
reduction  of  the  length  of  the  loan  from  eight  to  three 
years,  together  with  the  proviso  that  no  stock  could  be 
sold  below  par,  destroyed  the  usefulness  of  the  measure, 
and  less  than  one-half,  or  only  $5,672,076,  of  the  stock 
was  sold,  wdiich  was  about  equal  to  the  amount  of  treas- 
ury notes  outstanding. 

On  September  13,  1811,  Mr.  Ewing  was  succeeded  by 
Secretary  Forward,  of  Pennsylv^ania.  The  policy  of  the 
administration  was  changed  by  the  death  of  the  Presi- 
dent. The  repeal  of  the  Independent  Treasury  act 
August  13,  1811,  which  had  been  authorized  at  the  close 
of  the  Yan  Buren  administration,  was  about  the  only 


BILL  OF  1842  INTRODUCED  BY  MR.  FILLMORE.     51 

point  gained  by  the  Harrison  administration,  and  this 
repeal  pi-actically  left  the  treasury  to  be  managed  by 
tliose  who  were  unfriendly  to  the  policy  of  the  Whig 
party. 

A  bill  for  the  issue  and  reissue  of  treasury  notes  was 
introduced  into  the  House  by  Mr.  Fillmore,  January  5, 
1842.  Among  other  proposed  amendments  wdiich  were 
rejected,  was  one  by  Mr.  Benton,  heavily  taxing  all 
bank  circulation,  especially  small  notes.  The  bill  be- 
came a  law  January  31,  1812.  Under  it  the  amount 
authorized  to  be  outstanding  at  any  one  time  was  limited 
to  five  millions,  but  the  total  amount  issued  and  I'eissued 
was  $7,959,991.     The  subsequent   act   of  August   31, 

1812,  authorized  the  issue  and  reissue  of  treasury  notes, 
provided  tlie  amount  outstanding  at  any  one  time 
should  not  exceed  six  millions,  and  under  it  notes  to 
the  amount  of  $3,025,554.89  were  issued. 

All  of  the  notes  issued  since  the  act  of  October  12, 
1837,  were  issued  payable  either  one  or  two  years  after 
date,  chiefly  for  one  year.  These  notes  were  continually 
falling  due  and  embarrassing  the  treasury.  Eleven 
millions  of  such  notes  were  to  fall  due  during  the  year 

1813,  and  accordingly  another  bill  was  introduced  by 
Mr.  Fillmore,  providing  for  the  reissue  of  such  notes  as 
should  be  redeemed  before  July  1,  1811.  The  bill  be- 
came a  law  on  March  3,  1843. 

The  amount  of  the  treasury  notes  outstanding  on  the 
dates  named  from  November,  1837,  to  March,  1813,  are 
shown  in  the  followinir  table : ' 


'  Page    186,    3d   Session   27  th   Congress,    Appendix.       Speech   of 
Woodbury. 


52 


UNITED  STATES  NOTES. 


MOXTUS. 


1837. 


March 


1838. 


1839. 


1840. 


5,518,964. 65  §6,552,946    §2,176,981 


November. . .  . ! §53, 723. 83    8,009,760.01 


1841. 


3,394,180      4,664,200 


1842. 


1843. 


March §5,393,094.00  .•?8,539,115  §11,656,387 

November I    7,371,705.00  10,039,056 

I  I  i 


Jolin  C.  Spencer  succeeded  "Walter  Forward  as  Secre- 
tary of  the  Treasury,  on  March  3,  1843,  and  was  himself 
succeeded,  on  June  15, 18-1-1,  by  George  M.  Bibb.  Under 
the  act  of  March  3,  181:3,  Mr.  Spencer  issued  about 
$850,000  treasury  notes.  On  the  face  of  each  note'  was 
engraved  ''  The  United  States  promise  to  pay,  one  year 

after  date,  to or  order,  fifty  dollars,  with  interest 

at  the  rate  of  1  mill  per  $100  per  annum."  On  the  back 
of  each  note,  lengthwise,  was  engraved,  "  This  note  will 
be  purchased  at  par  for  the  amount  of  principal  and  in- 
terest thereof,  on  presentation  at  either  of  the  Deposi- 
taries of  the  Treasury  in  the  City  of  Xew  York."  These 
notes,  which  were  issued  at  the  nominal  I'ate  of  interest 
of  one-thousandth  of  1  per  cent,  per  annum,  and  by  the 
indorsement  made  payable  on  denumd,  were  considered 
by  Congress  an  evasion  of  the  act  under  which  they  were 
issued.  The  Seci-etary  of  the  Treasury,  in  his  report  for 
December  6,  1843,  had  stated  that  less  than  $1^70,000 
of  these  notes  had  then  been  issued,  and  asserted  that 
the  right  to  purchase  such  notes  at  par  on  presentation 
was  given  by  the  eighth  section  of  the  act  of  October  12, 
1837,  as  follows  :  "And  the  said  Secretary  is  further 
authorized  to  make  purchases  of  the  said  notes,  at  par, 


'  See  Frontispiece. 


NOTES  ISSUED  BY  8ECRETABT  SPENCER.        53 

for  tlie  amount  of  the  principal  and  interest  due  at  the 
time  of  purchase  on  sucli  notes."  The  Committee  of 
Waj's  and  Means  were  instructed,  on  January  15,  1844, 
"  to  inquire  and  report  whetlier  tlie  notes  lately  issued 
by  the  Treasury  Department,  bearing  a  nominal  in- 
terest and  convertible  into  coin  on  demand,  and  now 
forming  part  of  the  circulating  medium  of  the  country', 
are  authorized  by  the  existing  laws  and  Constitution  of 
the  United  States  ; "  and  the  report  of  the  Commit- 
tee, which  also  contains  a  letter  of  the  Secretary 
giving  his  views  on  the  subject,  is  interesting  from 
the  fact  that  it  contains  the  principal  constitutional  ar- 
guments against  the  issue  of  paper  money  by  the  Gov- 
ernment.' 

During  the  second  session  of  the  27th  Congress, 
after  the  veto,  by  President  Tyler,  of  a  bill  to  au- 
thorize the  organization  of  a  Bank  of  the  United 
States,  he  recommended  the  passage  of  a  bill  for  the 
issue  of  exchequer  bills  of  not  less  than  $5  in  denomina- 
tion, which  notes  were  to  be  signed  by  the  Treasurer  of 
the  United  States,  and  countersigned  by  the  President  of 
the  Board  of  Exchequer,  and  redeemable  in  gold  and 
silver  on  demand  at  the  agency  where  issued.  This  bill, 
which  was  prepared  at  the  Treasury  Department,  did  not 
become  a  law,  and  it  was  claimed  by  the  Committee  that 
the  notes  issued  by  Secretary  Spencer  were  in  most  re- 
spects like  the  exchequer  notes  proposed  in  this  bill. 
The  principal  difference  M'as,  that  while  the  exchequer 
notes  were  to  be  in  denominations  as  low  as  $5,  without 
interest,  the  notes  issued  were  of  denominations  not  less 

'  Report  No.  379,  28th  Congress,  1st  Session,  H.  of  R. 


54  UNITED  STATES  NOTES. 

than  i?50,  and  bore  a  merely  nominal  rate  of  interest. 
It  was  claimed  by  the  Committee  that  the  Constitution 
antliorized  the  Government  to  borrow  money,  but  not  to 
issue  bills  of  credit ;  tliat  borrowing  money  implied  the 
paying  of  interest  for  the  money  borrowed  ;  tliat  inter- 
est-bearing treasury  notes  payable  at  a  future  day  were 
a  temporary  loan,  not  designed  to  circulate  as  money, 
and  could  properly  be  issued  ;  while  notes  bearing  no 
interest  and  payable  on  demand  were  bills  of  credit,  and 
could  be  issued  only  in  violation  of  the  Constitution. 

The  following  are  extracts  from  the  report  of  the 
Committee  :  "  The  power  to  issue  treasury  notes 
under  the  act  of  March  3,  IS-iS,  at  a  rate  of  interest 
not  exceeding  six  per  centum  per  annum,  should  the 
wants  of  the  public  service  require,  in  place  of  others 
redeemed  before  the  fii'st  day  of  July,  18-44,  seems  to 
be  clearly  granted.  The  notes  are  to  be  redeemed  at 
the  Treasury  after  one  year  from  their  dates,  respect- 
ively ;  and  the  Secretary  is  authorized  to  make  pur- 
chases of  said  notes,  at  par,  for  the  amount  of  principal 
and  interest  due  at  the  time  of  purchase.  This  is  con- 
strued to  mean,  and  the  Committee  do  not  intend  to 
question  such  construction,  a  purchase  before  the  expira- 
tion of  one  year,  when  the  notes  would,  by  limitation  of 
time,  become  payable.  Such  purchases,  however,  in  an- 
ticipation of  time,  necessarily  imply  the  ability  of  the 
treasury  to  make  them,  and  fair  notice  to  the  holders. 
These  issues  promise,  on  their  face,  to  pay  one  year 
after  date.  In  good  faith,  in  point  of  fact,  they  are  is- 
sued because  required  by  the  M^ants  of  the  public  ser- 
vice. If  the  wants  of  the  public  service  really  require 
the  issue  of  treasury  notes,  to  supply  the  deficiency  of 


COMMITTEE'S  REPORT  ON  SPENCER'S  NOTES.     55 

means,  then  it  is  clearly  impossible  that  the  ability  to 
purchase  the  notes  should  exist  at  the  time  of  issue,  and 
to  make  them,  2)resentl//,  convertible  into  coin.  If  the 
means  to  purchase  are  coextensive  with  the  amount  is- 
sued, coeval  and  coexistent,  then  it  is  perfectly  manifest 
that  the  wants  of  the  public  service  do  not  require  the 
issue.  If  the  wants  of  the  public  service  require  the  is- 
sues, then  there  must  be  a  present  inability  to  redeem. 
Wliether  this  inability  will  be  removed  before  the  efflux 
of  one  year  depends  upon  the  income  of  revenue,  and 
consequent  improved  condition  of  the  treasury. 

"  Tlie  ability  to  purchase  the  notes  within  the  year, 
tlierefore,  is,  at  the  time  of  issue,  a  future  contingency ; 
which  cannot  be  foreknown  by  the  Secretary,  so  as  to 
authorize  him  to  give  notice  that  the  notes  will  be  pur- 
chased at  par,  at  all  times  on  presentation,  and  at  any 
time  after  the  date  of  issue.  The  sound  construction 
and  the  common-sense  view  of  the  matter  seem  to  be, 
that  the  notes  may  be  issued,  if  the  wants  of  the  public 
service  require  ;  and  if  it  shall  be  seen,  subsequently, 
that  the  treasury  can  spare  the  means,  then,  and  not  till 
then,  is  the  Secretary  authorized,  or  indeed  able,  to 
make  the  purchase ;  and  ought  not,  and  cannot,  but 
upon  ascertainment  of  the  existence  of  those  means, 
give  notice  to  the  holders  of  the  notes  to  be  purchased. 
How  can  it  be  known  what  amount  in  the  treasury,  not 
otherwise  appropriated,  will  be  applicable  to  the  pur- 
chase ?  How  can  it  be  known  what  specific  amount  can 
be  drawn  from  the  treasury  to  make  purchases  of  notes  ? 

"These  views  render  it  clear  that  the  notice  endorsed 
on  the  notes,  and  issued  sinniltaneously  with  them,  that 
they  will    be  purchased   on  presentation,  is  not   such 


56  UNITED  STATES  NOTES. 

notice  of  purchase,  as  to  time  or  amount,  as  tlie  act  au- 
thorizing the  purcliase  contemplates ;  nor  is  it  such 
notice  as  a  connnon  borrower  of  nionej^  upon  time,  of 
one  year,  with  the  privilege  of  redeeming  within  the 
time,  if  able,  would  give  to  his  lender.  *  '^  It  is 
a  useless  and  dangerous  experiment  with  the  public 
faith  and  public  credit  in  times  of  peace.  The  public 
credit  should  be  used  sparingly  in  time  of  peace  ;  should 
be  nursed  and  invigorated,  so  that  it  might  be  a  safe 
reliance  in  great  and  pressing  emergencies.  But  nobody 
can  suppose  that  the  Secretary  either  expected,  desired, 
or  intended,  that  these  notes  should  be  actually  forth- 
with presented  and  paid.  It  is  impossible  to  avoid  the 
conclusion,  that  the  M'hole  plan  of  issuing  notes  payable 
on  demand,  as  these  notes  are,  in  fact,  made  payable  on 
demand,  by  the  endorsement,  is  a  deliberate  contrivance 
of  the  Secretary  of  the  Treasury,  with  the  approbation  of 
the  President,  to  infuse  into  the  circulation  of  the  coun- 
try', Government  paper.  *  *  The  Committee  may 
admit  that  the  maximum  rate  of  interest  being  six 
per  cent,  per  annum,  and  no  restriction  as  to  a  mini- 
mum rate,  that  a  mere  nominal  rate  of  interest  cannot, 
of  itself,  be  charged  as  transgressing  the  letter  of  the 
law.  But  if  a  mere  nominal  rate  of  interest  be  charged 
for  the  purpose  of  aiding  in  an  object  not  contemplated 
by  the  law  or  authorized  by  the  Constitution,  then  such 
nominal  rate  of  interest  is  a  mere  pretext  to  cover  a 
perversion  of  law,  and  a  violation  of  the  Constitution. 
The  nominal  rate  of  interest  is  so  very  small  as  hardly 
to  admit  of  computation ;  and  for  all  practical  purposes, 
the  notes  may  be  regarded  as  carrying  no  interest ; 
wdiilst  the  endorsement,  that  they  will  be  paid  at  sight, 


CONSTITUTIONALITY  OF  DEMAND  NOTES.       57 

at  either  of  tlic  depositaries  of  the  Treasurj^,  in  the  city 
of  New  York,  imparts  to  th.ein  tlie  character  of  ordinary 
bank  paper,  calcidated  and  intended  to  cirenlate  as 
money,  in  the  hands  of  the  citizens.  It  is  an  emission 
of  paper,  on  the  pnblic  credit,  to  be  circnlated  as  money, 
like  bank  notes.     *     "^ 

"  It  is  strongly  to  be  inferred  that  Congress  did  not 
intend  or  expect  any  departnre  from  the  former  prac- 
tices, nuich  less  the  introduction  of  a  new  principle. 
For  the  Committee  conceive  that  the  issue  of  notes  pay- 
able on  demand,  out  of  funds  then  on  hand,  and  in  the 
treasury,  is  totally  different  in  principle  from  the  issue 
of  notes  promising  to  pay  one  year  after  date,  intended 
to  supply  a  present  deficit  in  the  treasury,  and  to  be  re- 
imbursed thereafter  out  of  accruing  j-evenue.  *  *  The 
power  to  borrow  money  on  the  credit  of  the  United  States 
was  unanimously  given,  whilst  the  power  to  emit  bills  of 
credit  was  refused — was  struck  out  of  the  plan  proposed, 
by  a  vote,  in  convention,  of  nine  States  to  two.  And 
yet  the  Secretary  of  the  Treasurj^  contends  that  because 
there  are  no  express  words  of  prohibition,  as  there  are 
a})plied  to  the  States,  that  Congress  may  exercise  the 
jxnver  incidentally  or  appertinently  to  the  power  of  bor- 
rowing money,  whilst  the  States  are  totally  precluded 
from  a  resort  to  bills  of  credit,  either  as  a  principal  or 
primary  power,  or  in  any  way  as  incidentally  or  appro- 
priately connected  with  some  other  power  clearly  re- 
served to  the  States.  It  was  thought  that  it  was  too 
late  to  undertake  to  revive  the  exploded  Federal  doc- 
trine of  claiming  power  because  it  had  not  been  ex- 
pressly forbidden.  And  it  is  a  matter  of  ecpial  surprise 
that,  at  this  late  day,  it  should  be  seriously  maintained 
3* 


58  UNITED  STATES  NOTES 

by  any  federal  officer,  that  bills  of  credit  (a  paper  cnr- 
reucy)  may  be  supplied  to  the  country  under  cover  of  the 
granted  power  to  borrow  money.  The  powder  to  supply 
a  paper  currency  is  thus  made  of  contingent  existence, 
depending,  fii-st,  upon  the  necessity  of  exercising  the 
primary  power  to  borrow  money,  and  then  upon  the 
polic}'  adopted  of  making  the  loan  more  permanent,  in 
the  shape  of  funded  debt,  or  upon  shorter  time,  in  the 
shape  of  treasury  notes.  The  want  of  additional  cur- 
rency might  possibly  be  experienced  by  the  country, 
when  there  would  be  no  deficiency  of  means  in  the 
treasury  to  make  a  loan  necessary  or  proper.  In  this 
condition  of  affairs  there  would  exist  no  authority  to 
supply  the  needed  currency.  Again,  a  temporary  loan 
might  become  necessary,  and  might  be  authorized  by 
Congress  in  the  form  of  treasury  notes,  at  a  time  when 
the  country  was  abundantly  supplied  with  a  sound  cir- 
culating medium,  and  in  that  condition  of  affairs,  accord- 
ing to  the  argument  of  the  Secretary  of  the  Treasury, 
under  cover  of  the  authorized  loan,  and  by  the  adoption 
of  a  peculiarly  ingenious  mode  of  issuing  the  notes  of 
the  treasmy,  a  currency,  not  needed,  might  be  sup- 
plied. *  *  The  omission  to  give  the  power  to  the 
Federal  Government  '  to  emit  bills  of  credit '  as  com- 
pletely bars  that  Government  from  the  exercise  of  the 
power,  as  does  the  express  prohibition  to  the  States  '  to 
emit  bills  of  credit '  bar  them  from  the  exercise  of  such 
power.  According  to  the  received  and  well-established 
loctrine,  that  the  States  are  sovereign,  and  have  the 
right  of  self-government,  it  would  follow  that  they 
might  impart  to  their  legislatures  ample  powers  to  leg- 
islate upon  all  subjects  whatsoever  meet  for  legislation  ; 


REPORT  OF  COMMITTEE  CONTINUED.  59 

that  they  might  constitute  them,  under  their  own  con- 
stitutions, C077ij)lete  legislatures.  Hence  they  agreed,  in 
convention,  to  abstain  from  the  exercise  of  certain  enu- 
merated powers,  which  otherwise  would  justly  and  right- 
fully pertain  to  them  as  '  free  and  independent  States.' 
And  intending,  in  good  faith,  to  relinquish  and  abandon 
the  exercise  of  those  certain  powers,  they  inserted  in 
their  constitutional  compact  of  union  express  prohibi- 
tions. The  States,  by  fair  and  natural  construction, 
would  retain  to  themselves  all  powers  not  conferred  ex- 
clusively upon  the  Federal  Government,  or  expressly 
prohibited  to  the  States  ;  and  yet,  out  of  abundant  cau- 
tion, and  to  remove  the  possibility  of  doubt  or  cavil,  an 
express  amendment  of  the  Constitution  to  that  effect  was 
adopted  and  ratified. 

"  It  will  not  be  questioned  by  the  Secretary,  the  Com- 
mittee suppose,  that  the  States  did  possess,  and  have  re- 
served the  power  to  borrow  money.  Certain  it  is,  that 
they  have  very  generally  and  very  extensively  exercised 
such  power.  Now,  if  the  power  to  boi-row  money  on  the 
credit  of  a  State  be  unqualified,  like  the  power  of  Con- 
gress to  borrow  money  on  the  credit  of  the  United 
States,  the  Committee  cannot  comprehend  the  logic  by 
which  the  conclusion  is  reached,  tliat,  in  the  latter  case, 
whilst  the  absolute  and  independent  power  of  issuing 
bills  was  intentionally  withheld,  yet  it  was  meant  to 
leave  Congress  unrestricted  in  the  choice  of  such  means 
of  borrowing,  if  the  emission  of  bills  should,  at  any 
time,  be  deemed  the  most  expedient  mode  of  attaining 
that  object ;  and  by  which,  in  the  former  case,  the  other 
and  contrary  conclusion  is  also  reached,  that  whilst  the 
absolute  and  independent  power  of  emitting  bills  of 


60  UNITED  STATES  NOTES. 

credit  is  proliibitod  to  the  States,  the  like  unrestricted 
choice  in  the  means  of  borrowing,  bj  the  emission  of 
bills,  should  at  any  time  be  deemed  the  most  expedient 
mode  of  attaining  that  object,  is  not  left  to  the  States, 
I^either  Congress  nor  the  States  can  emit  bills  of  credit, 
in  the  exercise  of  an  absolute  and  independent  power. 
Congress  and  the  States  possess  the  unqualified  power 
to  borrow  money.  Congress  is  unrestricted  in  the  choice 
of  means,  and  may  issue  bills  of  credit,  if  that  mode  of 
borrowing  should,  at  any  time,  be  deemed  the  most  ex- 
pedient. The  States,  however,  are  not  equally  unre- 
stricted in  the  choice  of  means,  and  may  not  issue  bills, 
although  that  mode  of  borrowing  should,  at  any  time, 
be  deemed  the  most  expedient.  *  *  When  the 
loan  obtained  is  for  any  considerable  length  of  time, 
it  is  usual  to  fund  the  debt  thereby  created  by  issuing 
certificates  of  stock.  Where  the  loan  obtained  has  only 
a  short  time  to  run,  and  it  is  proposed  to  pay  it  off 
speedily  with  the  accruing  revenue,  the  ordinary  mode 
is,  to  authorize  the  Secretary  of  the  Treasury  to  issue 
treasury  notes,  payable  at  the  expiration  of  a  limited 
time,  bearing  such  interest  as  may  be  expressed  and  al- 
lowed by  the  act  directing  the  issue  of  the  notes.  Such 
notes  are  intended,  hooia  Jidc\  as  a  temporary  loan,  and 
are  not  designed  or  expected  to  circulate  as  a  currency. 
Such  notes  were  doubtless  within  the  contemplation  of 
Gouverneur  Morris,  when  he  remarked,  that  striking 
out  the  authority  to  issue  bills  of  credit,  would  not 
prevent  the  use  of  the  notes  of  a  responsible  minister, 
and  that  would  do  all  the  good  without  the  mischief. 
*  *  The  use  of  public  notes  can  be  justified  only 
us  the  mode  of  effecting  a  loan — they  are  employed  to 


AMOUNT  OF  NOTE  ISSUES,    1837-1844.  CI 

acknowledge  the  existence  of  a  debt  due  by  the  United 
States,  and  contain  a  promise  to  pay  it,  at  some  future 
stipulated  time,  with  interest,  as  may  be  agreed.  To 
issue  notes  for  circulation,  payable  on  demand,  under 
cover  of  the  authority  to  borrow  money  in  the  form  of 
treasurj'  notes,  is  deemed  an  abuse  of  authority  which 
ought  to  be  con-ected." 

From  March  3,  1843,  until  July  2G,  1S4G,  no  new  is- 
sues of  treasury  notes  were  authorized.  From  1837  to 
1844  treasury  notes  amounting  to  $47,002,900  were  is- 
sued under  eight  different  acts,  of  which  |46,21G,935.82 
were  redeemed  by  the  close  of  1845.  The  lowest  de- 
nomination for  any  one  note  was  $50,  but  where  new 
notes  were  issued  in  place  of  old  ones  the  accrued  inter- 
est was  often  added.  The  amount  authorized  to  be 
originally  issued  by  these  several  acts  was  thirty-one 
millions.     The  remainder  consisted  of  reissues. 

The  notes  issued  under  the  act  of  October  12,  1837, 
and  the  six  succeeding  acts  were  all  printed  from  the 
same  series  of  plates,  and  the  different  rates  of  interest 
were  inserted  in  writing.  A  new  set  of  plates  were 
prepared  for  notes  issued  under  the  act  of  March  3,  1S43, 
and  the  following  words,  "  with  interest  at  the  rate  of  one 
mill  per  $100  per  annum,"  were  engraved  in  the  body 
of  the  note.  These  notes  were  all  of  the  same  size,  the 
largest  ever  issued,  and  measure  eight  by  four  inches. 
Photo-lithographs  of  the  originals  issued  under  these  acts 
may  be  found  at  the  begimiing  and  end  of  this  volume. 

The  following  table  exhibits  the  amount  of  treasury 
notes  issued  each  year,  under  different  acts  of  Con- 
gress, from  October  12,  1837,  to  March  3,  1843,  from 
which  it  will  be  seen  that  the  total  amount  issued  M'as 


C2  UNITED  STATES  NOTES. 

$47,002,900,  all  of  wliicli  was  sold  or  issned  at  par. 
Interest  varied  from  1  mill  per  cent,  to  6  per  cent.,  and 
the  amount  authorized  was  liftj-one  millions. 

1837— Act  of  October  12,  1837 $2,992,989  15 

1838— Act  of  October  12,  1887 7,007,010  85 

1838— Act  of  May  21,  1838 5,709,810  01 

1839— Act  of  March  2,  1839 3,857,276  21 

1840— Act  of  March  31,  1840 5,589,547  51 

1841— Act  of  March  31,  1840 1,524,703  80 

1841— Act  of  February  15,  1841 6,468,856  70 

1842— Act  of  February  15,  1841 1,060,206  05 

1842— Act  of  January  31,  1842 7,914,044  83 

1843— Act  of  January  31,  1842 45,350  00 

1843— Act  of  August  31,  1842 2,408,554  89 

1843— Act  of  August  31,  1842 617,000  00 

1844— Act  of  March  3,  1843 1,806,950  00 

Total 147,002,900  00 


CHAPTER  YII. 

TREASURY  NOTES  OF  THE  PERIOD  OF  THE  MEXICAN  WAR. 

On  July  1,  1844,  the  public  debt  of  tlie  United  States 
amounted  to  $24,748,188,  and  consisted  principally  of 
stocks  not  payable  until  the  lapse  of  ten  and  twenty 
years.'  The  5  per  cent,  stocks  payable  in  ten  years 
were  at  a  premium  of  106,  and  the  6  per  cent,  stocks 
payable  in  twenty  years,  at  a  premium  of  116.  The 
Secretary  estimated  that  the  revenue  under  the  tariff  of 
1842  would  yield  a  much  larger  amount  than  was  neces- 
sary. Accordingly,  Congress,  in  July,  1846,  passed  a  bill 
amending  the  tariff  and  reducing  the  duties  on  imports. 
In  the  meantime,  during  the  year  1845,  difficulties  with 
Mexico,  owing  to  the  annexation  of  Texas,  rendered  war 
inevitable,  and  on  May  13,  1846,  war  was  declared. 
Secretary  Walker  estimated  that,  if  the  war  should 
continue  for  a  3'eai-,  there  would  be  a  deficiency  of  more 
than  twelve  millions  ;  and,  in  order  to  meet  this  defi- 
ciency, a  bill  was  repoi-ted  from  the  Committee  on  Ways 
and  Means,  which,  with  some  additions,  embodied  the 
provision  of  the  act  of  October  12,  1837,  as  to  treasury 
notes,  and  that  of  April  14,  1842,  as  to  a  loan.  The 
following  is  the  form  of  a  $100  note  issued  under  this 
act :  Seepage  65. 

'  Report  of  Secretary  Bibb,  1844. 


C4  UNITED   STATES  NOTES. 

These  notes  -were  printed  from  tlie  plates  nsed  foT 
printing  the  notes  authorized  by  the  acts  of  October  12, 
1837,  to  Angust  31,  1842.  The  bill  referred  to  anthor^ 
ized  an  issue  of  treasury  notes  to  an  amount  of  ten  mil- 
lions, which  could  also  be  reissued,  and  also  a  loan  which 
could  be  issued  in  lieu  of  treasury  notes  ;  the  amount  of 
both  not  to  exceed  ten  millions.  The  stock  was  to  be 
redeemable  after  ten  years,  no  notes  of  less  than  $50 
w^ere  to  be  issued,  and  they  were  to  be  signed  by  the 
Treasurer  and  the  llegister.  The  rate  of  interest  was 
not  to  exceed  6  per  cent.  Kotes  were  to  be  used  in  pay- 
ment of  public  creditors  who  would  receive  them,  and 
the  Secretary  could  borrow  money  on  them.  The 
bill  became  a  law  July  22,  1846.  Under  tliis  act,  $7,- 
CS7,800  of  notes  were  issued,  and  8J:,999,149  of  stock. 
Of  these  notes  $2,086,550  bore  interest  at  5|  per  cent, 
and  $1,766,450  at  1  mill  per  cent,  per  annum. 

In  January,  1847,  the  treasury  was  again  in  need,  and 
to  meet  this  necessity  a  bill  M'as  introduced,  authorizing 
the  issue  of  twenty-three  millions  of  treasury  notes,  and 
an  additional  five  millions  under  the  act  of  July  22, 
1846.  This  was  an  clal)orate  bill,  containing  all  neces- 
sary^ provisions  within  itself,  without  referring  back  to 
the  provisions  of  previous  acts,  as  had  been  usually  the 
case  in  legislation  of  this  kind.  The  debate  was  princi- 
pally upon  the  conduct  of  the  war,  and,  after  one  or  two 
amendments  had  been  agreed  to,  the  bill  passed  the 
House  on  the  same  day  that  it  M^as  introduced,  by  a  vote 
of  166  to  22.  In  the  Senate,  on  January  25th,  a  resolu- 
tion to  postpone  its  consideration  was  lost,  and  the  debate 
took  considerable  latitude,  principally  upon  the  tariff 
question.     Tlie  general  sentiment  appeared  to  be,  that 


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TREASURY  NOTES  OF  THE  MEXICAN  WAR.        69 

in  the  midst  of  the  war  the  honor  of  the  country  must 
be  sustained.  Finally,  with  some  slight  amendments, 
the  bill  passed  on  January  27,  1847,  by  a  vote  of  43  to 
2,  and  became  a  law  on  the  following  day. 

Notes  issued  under  this  act  were  not  to  be  of  a  less 
denomination  than  $50,  and  were  receivable  in  paj^ment 
of  public  dues,  including  duties  on  imports,  and  were 
redeemable  at  the  expiration  of  one  or  two  years,  and 
the  interest  was  to  cease  at  the  expiration  of  sixty 
days'  notice.  On  page  67  is  the  form  of  a  6  per  cent. 
$100  note  issued  under  this  act.  {A  j[>hoto-litJcogra]_)h 
of  thin  note  is  given  at  end  of  the  vohime.') 

The  principal  of  the  notes  w^as  fundable  into  6  per 
cent,  bonds,  redeemable  after  December  30,  1867,  and 
this  privilege  was  extended  to  the  holders  of  notes  issued 
under  previous  acts.  Reissues  were  authorized,  but  the 
amount  of  stock  and  notes,  at  any  one  time,  was  not  to 
exceed  twenty- three  millions.  The  right  to  issue  treas- 
ury notes,  under  the  act  of  July  22,  1816,  was  extended 
by  the  fifteenth  section  to  the  period  fixed  by  these  acts, 
and  on  the  same  terms,  but  the  issue,  under  this  section, 
was  not  to  exceed  five  millions.  $12,371,150  of  these 
notes  were  issued  previous  to  July  1,  1817,  and  $11,- 
956,950  additional  notes  were  issued  during  the  next 
fiscal  year.  The  whole  amount  of  issues  and  reissues 
under  the  act  was  $26,122,100,  all  of  which  wci'e  either 
sold  or  paid  to  public  creditors  at  par.  Tlie  rate  of  in- 
terest of  the  notes  was  5|  and  6  per  cent.,  and  United 
States  6  per  cent,  bonds,  chiefly  for  the  purpose  of  re- 
deeming these  notes,  were  issued  under  the  same  act, 
amounting  to  $28,230,350. 


CHAPTER  YIII. 

TREASURY   NOTES    OF   THE    BUCHANAN   ADMINISTRATION. 

The  treasury  notes  issued  under  tlie  act  of  Januarj^  28, 
184:7,  were  all  retired,  with  the  exception  of  about  $200,- 
000,  previous  to  July  1,  1850,  and  no  additional  treasury 
notes  were  authorized,  until  the  passage  of  the  act  of 
December  23,  1857.  Secretary  Cobb,  in  his  report  for 
that  year,  estimated  that  the  receipts  would  exceed  the 
expenditures,  but  said  that  the  financial  revulsion  which 
had  caused  the  banks  to  suspend  specie  payment  in  Octo- 
ber of  that  year,  had  also  caused  a  large  part  of  the  duti- 
able merchandise  to  be  stored  without  payment  of  duty, 
where  it  could  remain  under  the  law  for  three  years, 
although  it  was  probable  that  a  considerable  portion 
would  be  withdrawn  and  the  duties  paid  previous  to  that 
date.  Meanwhile,  means  should  be  provided  for  meet- 
ing the  demands  upon  the  treasuiy,  and  he  recommended 
that  authority  should  be  given  to  issue  treasury  notes 
'•for  an  amount  not  exceeding  twenty  millions  of  dollars, 
and  payable  within  a  limited  time,  and  carry  a  specified 
rate  of  interest."  A  bill,  in  accordance  with  the  sugges- 
tion of  the  Secretary,  was  introduced  into  both  Houses  of 
Congress  on  December  IS,  1857.  It  passed  the  Senate 
on  the  following  day,  by  a  vote  of  31  to  18,  and  the 
House  on  the  22d  by  a  vote  of  118  to  86,  and  was  ap- 
proved on  the  following  day  and  became  a  law.  The 
bill  provided  for  the  issue  of  notes  payable  in  one  year 


NOTES  OF  TEE  BUCHANAN  ADMINISTRATION.     71 

from  date  of  issue,  to  an  amount  not  exceeding  twenty 
millions.  $6,000,000  were  to  be  issued  at  a  rate  of  inter- 
est not  exceeding  6  per  cent.  The  i-emainder  was  to  be 
sold  after  public  advertisement  of  not  less  than  thirty 
days,  at  their  par  value,  for  specie,  to  the  bidders  offering 
to  take  them  at  the  lowest  rate  of  interest,  not  exceeding 
6  per  cent.  The  interest  upon  the  notes  was  to  expire, 
after  maturity  of  notes,  upon  sixty  days'  notice  from  the 
Secretary,  of  his  readiness  to  redeem  such  notes ;  they 
were  to  be  issued  in  denominations  of  not  less  than  $100, 
and  were  to  be  signed  by  the  Treasurer  and  Register ; 
they  were  receivable  in  payment  of  all  dues  to  the  United 
States.  The  whole  amount  authorized  was  issued,  and 
the  amount  of  issues  and  reissues,  in  all,  was  $.52,T78,900. 
The  interest  upon  these  notes  was  as  follows :  $6,323,600 
at  3  per  cent.;  $985,000  at  from  3^  to  4  per  cent.;  $688,- 
000  at  4i  per  cent.;  10,055,700  at  4^  per  cent.;  $4,532,- 
500  at  4f  per  cent.;  $7,533,900  at  5  per  cent.;  $8,204,- 
500  at  52-  per  cent.;  $3,514,100  at  5|  per  cent;  and 
$10,941,600  at  6  per  cent.  On  page  73  is  the  form  of  a 
3  per  cent.  $100  note  issued  under  this  act. 

The  following  table  exhibits  the  different  kinds  of 
treasury  notes  outstanding  which  were  issued  from  the 
organization  of  the  Government  to  the  date  of  tiie  pas- 
sage of  the  act  of  March  2,  1861,  and  which  had  not 
been  presented  for  payment  on  October  1,  1887  : 


Notes. 


Rate  of  Interest. 


Treasury  Notes,  18-lti.  Prior  to  1S46  1  mill  to  6  por  cent. 
Treasury  Notes,  1S46  July  22,  ]S4i)jl  mill  to  0  per  cent. 
Treasury  Notes,  1847.  Jan.  2H,  1847  fl  jier  cent. 

Treasury  Notes,  1857.  Dec.  23, 1857  3  to  6  per  cent. 


Principal 


32,425 

5,900 

'.)50 

700 


Interest. 


$2,6C.2.06 

300.60 

57.00 

40.7tj 


72  UNITED  STATES  NOTES. 

The  total  public  debt  on  June  20, 1860,  was  $64,Y69,. 
703.08.  The  outstanding  treasury  notes  issued  under  act 
of  June  23, 1857,  were  $19,690,500.  The  amount  of  treas- 
ury notes  outstanding,  issued  under  acts  previous  to  that 
date,  was  $105,111.64.  The  act  of  June  22,  1860,  au- 
thorized a  loan  of  twenty-one  millions,  at  a  rate  of  in- 
terest not  exceeding 6  per  cent.,  to  be  reimbursed  within 
a  period  not  more  than  twenty  years,  and  not  less  than 
ten  years.  The  money  was  to  be  used  in  the  redemp- 
tion of  treasury  notes,  and  to  replace  any  amount  paid 
to  the  treasurer  in  sucli  notes  for  public  dues.  Under 
this  authority,  proposals  were  invited  by  Secretary  Cobb, 
on  September  8,  1860,  for  ten  millions  of  this  loan, 
whicli  amount  was  "  ample  to  meet  all  the  treasury  notes 
that  would  fall  due  before  January  1,  1861."  In  his 
report  for  December  4,  1860,  he  says :  "  The  rate  of 
interest  was  fixed  at  5  per  centum  per  annum,  under 
the  conviction  that  the  loan  could  be  readily  negotiated 
at  that  rate,  for,  at  that  time,  the  5  per  cent,  stock  of 
the  United  States  was  selling  in  the  market  at  the  pre- 
mium of  3  per  cent.  The  result  realized  this  just  ex- 
pectation, and  the  whole  amount  offered  was  taken, 
either  at  par  or  a  small  premium."  Before,  however, 
the  time  had  arrived  for  payment  on  the  part  of  the 
bidders,  political  complications  arose,  which  affected 
the  credit  of  the  Government  so  unfavorably  that  the 
amount  realized  was  but  $7,022,000,  the  subscribers  of 
$2,978,000  having  failed  to  make  good  their  subscrip- 
tions. The  Secretary  stated  that,  in  the  present  condition 
of  the  country,  capitalists  were  unwilling  to  invest  in 
United  States  stock  at  par,  and  recommended  a  repeal 
of  so  much  of  the  act  of  June  22,  1860,  as  authorized 


RECOMMENDATIONS  OF  SECRETARY  COBB.       75 

the  issue  of  the  additional  stock,  and  asked  for  authority 
for  the  issue  of  treasury  notes  for  the  same  amount,  "  to 
be  negotiated  at  such  rates  as  will  command  the  confi- 
dence of  the  country."  He  recommended  that  the  public 
lands  be  unconditionally  pledged  for  the  ultimate  re- 
demption of  all  the  treasury  notes  which  it  may  become 
necessary  to  issue,  and  suggested,  "  that  there  should  al- 
ways exist  in  the  Department  power  to  issue  treasury 
notes  for  a  limited  amount,  under  the  direction  of  the 
President,  to  meet  unforeseen  contingencies.  It  is  a 
power  which  can  never  be  abused,  as  the  amount  realized 
from  such  source  can  only  be  nsed  to  meet  lawful  de- 
mands upon  the  treasury.  ]S[o  Secretary  of  the  Ti-easury 
or  President  would  ever  exercise  it,  unless  conipelled  to 
do  so  by  the  exigencies  of  the  public  service.  On  the 
other  hand,  it  would  enable  the  Government  to  meet, 
without  embarrassment,  those  sudden  revulsions  to  M'hich 
the  country  is  always  liable,  and  which  cannot  always 
be  anticipated.  I  have  already  stated  that  provision 
should  be  made  at  once  to  relieve  the  treasury  from  its 
present  embarrassment,  produced  by  the  causes  referred 
to.  To  do  this,  Congress  should  authorize  the  issue  of 
an  additional  amount  of  treasury  notes,  not  less  than  ten 
millions  of  dollars  ;  with  this  means  the  Department 
would  be  enabled  to  meet  all  lawful  demands  upon  it 
for  the  present.  The  extent  of  the  financial  crisis, 
through  which  the  country  is  now  passing,  cannot  now 
be  determined,  and  until  it  is  better  known,  no  policy 
can  be  recommended  of  a  permanent  character." 

Secretarj'-  Cobb  resigned  on  December  10th,  but  the 
act  of  December  17,  1860,  was  passed  in  compliance 
with  the  suggestions  contained  in  his  report.   The  pledge 


T6  UNITED  STATES  NOTES. 

of  the  proceeds  of  the  public  land  ^-as  not  given  in  the 
act,  and  one  of  the  reasons  for  withholding  such  legis- 
lation Avas,  that  it  would  interfere  with  the  passage  of 
the  homestead  bill  which,  was  then  under  consideration. 
The  act  authorized  the  issue  of  ten  millions  of  treasury 
notes  in  denominations  of  not  less  than  $50,  redeemable 
in  one  year  from  the  date  of  issue,  with  interest  at  the 
rate  of  G  per  cent.,  but  the  Secretary  was  authorized  to 
issue  such  notes  after  advertisement  at  the  lowest  rate  of 
interest  offered.  Of  these  notes,  iive  millions  were  of- 
fered to  subscribers.  The  bids  were  opened  December 
28th,  and  only  B500,000  were  taken  at  12  per  cent.  It 
was  important  to  negotiate  the  loan,  in  order  to  meet 
the  interest  on  Government  bonds  npon  January  1st. 
The  remainder  of  the  loan  was  subscribed  by  the 
banks  in  Xew  York,  previous  to  that  date,  at  12  per 
cent. 

Gen.  John  A.  Dix  was  appointed  Secretary  of  the 
Treasury  on  January  11th,  and  bids  for  the  remaining 
$5,000,000  were  opened  on  the  19th,  and  the  notes 
awarded  at  the  average  rate  of  10|  per  cent.,  as  follows : 

$10,000 , at  8f  per  cent. 

30,000 9 

10,000 Oi  " 

140,000 9i  " 

67,000 9f  " 

721,000 10  " 

265,000 lOi  " 

543,000 lOi  " 

1,267,000 lOf  " 

1,947,000 11 

Total..  15,000, 000  Average,  1  Of  per  cent. 


BIDS  FOR  TREASURY  NOTES  UNDER  SECY  DIX.    77 

The  whole  ten  millions  were  issued,  redeemable  at  the 
expiration  of  one  year  from  date,  bearing  interest  as 
follows :  $70,200  at  6  per  cent.  ;  $384,500  at  rates  va- 
rying from  G  to  10  per  cent. ;  $1,027,500  at  10  per 
cent.  ;  $3,688,700  at  rates  from  10  to  12  per  cent. ;  and 
$4,840,000  at  12  per  cent.  Additional  offers  bearing  in- 
terest, ranging  from  15  to  3G  per  cent.,  were  declined. 
The  amount  of  treasury  notes  outstanding  on  Decem- 
ber 1,  1860,  previous  to  the  passage  of  this  act,  was 
$14,599,700,  of  which  $42,600  was  payable  in  1859, 
$3,133,400  in  1860,  and  $11,423,700  in  1861.  Of  these 
notes,  $8,684,200  bore  interest  at  6  per  cent.,  and  the 
remainder  at  lower  rates. 

Secretary  Dix,  in  a  letter  to  the  Chairman  of  the  Com- 
mittee of  Ways  and  Means, dated  January  18, 1861, says: 
"  Within  the  last  few  days  the  amount  of  over-due  treas- 
ury notes  presented  for  redemption  lias  exceeded  the 
power  of  the  Treasurer  to  place  drafts  for  payment  on  the 
Assistant  Treasurer  at  JSTew  York,  where  the  holders  de- 
sire the  remittances  to  be  made  ;  and  an  accumulation  of 
warrants,  to  the  amount  of  about  $433,000,  has  accrued  on 
this  account  in  the  Treasurer's  hands,  which  he  has  been 
unable  to  pay."  He  also  says  :  "  That  notice  issued  on 
the  18th  ultimo  invited  proposals  for  the  exchange  of 
five  millions  of  dollars  for  treasury  notes,  and  oifers  at 
12  per  cent,  or  less  were  made  only  to  the  amount  of 
$1,831,000  ;  ofeers  to  exchange  $465,000  for  notes  bear- 
ing interest  at  I'ates  varying  from  18  to  36  per  cent, 
were  also  received.  The  offers  at  12  per  cent,  and  less 
were  accepted ;  those  above  that  rate  were  rejected. 
The  remainder  of  the  five  millions  offered  was  soon 
thereafter  taken  at  12  per  cent.,  and  the  whole  amount 


78  UNITED  STATES  NOTES. 

was  pledged  to  tlie  payment  of  over-due  trecasurj  notes 
and  other  pressing  demands  on  tlie  treasury.  *  ^' 
During  the  last  quarter,  about  eight  millions  of  treasury 
notes  were  redeemed,  which,  with  the  two  and  one-half 
millions  redeemed  since  the  first  instant,  make  ten  and 
a  half  millions.  The  amount  received  from  the  loan,  a 
small  fraction  above  seven  millions,  threw  upward  of 
three  and  a  half  millions  of  these  notes  on  the  other  re- 
sources of  the  treasury  for  redemption.  This  is  one  of 
the  principal  causes  of  the  delay  and  difficulty  which 
have  recently  existed  in  providing  for  other  demands  of 
public  service."  So  low  had  the  credit  of  the  Govern- 
ment fallen,  through  the  political  agitations  and  troubles 
just  previous  to  the  War  of  the  Rebellion,  that  he  closed 
his  communication  by  calling  attention  to  the  fact,  that, 
''  there  are  deposited  with  twentj'-six  of  the  States,  for 
safe  keeping,  over  twenty-eight  millions  of  dollars  be- 
longing to  the  United  States,  for  the  payment  of  which 
the  promise  of  these  States  is  pledged  by  written  instru- 
ments on  file  in  this  Department.  The  annual  statement 
of  receipts  and  expenditures  for  the  year  ending  June 
30,  1860,  represents  this  amount  as  part  of  the  '  balance 
in  the  treasury '  on  that  day.  *  *  I  refer  to  this 
final  resource  as  an  available  one,  should  the  public  ex- 
igencies demand  it.  It  is  not  doubted  that  the  greater 
portion  of  the  amount  so  deposited  would  be  promptly 
and  cheerfully  paid  should  an  exigency  arise  involving 
the  public  honor  or  safetv.  If,  instead  of  cahing  for 
these  deposits,  it  should  be  deemed  advisable  to  pledge 
them  for  the  repayment  of  any  money  the  Government 
might  find  it  necessary  to  borrow,  loans  contracted  on 
fiuch   a  basis  of  security,  superadding  to  the  plighted 


LOAN'S  AND  NOTES  OF  1861.  T9 

faith  of  the  United  States  that  of  the  individual  States, 
could  hardly  fail  to  be  acceptable  to  capitalists." 

During  the  following  month  the  act  of  February  8, 
1861,  was  passed,  which  authorized  a  loan  not  exceeding 
twenty-five  millions  of  6  per  cent,  bonds,  the  avails  to  be 
used  in  the  payment  of  current  expenses,  for  the  redemp- 
tion of  outstanding  treasury  notes,  and  to  replace  in  the 
treasury  such  amounts  as  had  been  paid  in  treasury  notes. 
Of  this  loan,  bearing  6  per  cent,  interest,  and  having 
twenty  years  to  run,  $18,415,000  was  issued,  at  an  aggre- 
gate discount  of  $2,019,776,  or  an  average  rate  of  $83.03 
for  $100.  In  less  than  a  month  after  the  passage  of  this 
act  providing  for  the  payment  of  the  treasury  notes  out- 
standing, the  act  of  March  2,  1861,  was  passed,  which  au- 
thorized a  loan  of  ten  millions  at  6  per  cent.,  redeemable 
upon  three  months'  notice,  after  July  1,  1871,  payable 
July  1,  1881,  or,  histead  thereof,  the  issue  of  $10,000,000 
of  new  notes  in  denominations  of  not  less  than  $50,  bear- 
ing interest  at  the  rate  of  6  per  cent,  per  annum,  payable 
semi-annually,  receivable  in  payment  of  all  debts  due  the 
United  States,  including  customs  duties,  and  redeemable 
at  pleasure,  within  two  years  from  the  passage  of  the  act. 
The  same  act  largely  increased  the  duties  on  imports, 
and  authorized  the  substitution  of  treasury  notes  for  the 
whole  or  a  part  of  the  loans  previously  authorized.  Under 
this  act,  $35,364,450  in  all,  of  treasury  notes,  were  issued, 
of  which  $22,468,100  were  redeemable  in  two  years,  and 
$12,896,350  redeemable  in  sixty  days  after  date ;  and  a 
considerable  portion  of  these  notes  were  paid  out  to  cred- 
itors. A  new  series  of  plates  was  prepared  for  each  of 
the  issues  of  treasury  notes  under  the  acts  of  January  28, 
1847,  December  23,  1857,  and  March  2, 1861.  The  size 
of  the  latter  note  was  74  by  3|  inches. 


CHAPTER  IX. 

TKEASUKT   NOTES    OF   THE   PERIOD    OF   THE    CIVIL   WAR. 

General  Dix  was  succeeded  by  Secretary  Chase  on 
March  7,  1861.  The  great  increase  of  import  duties, 
imposed  by  the  act  of  March  2d,  had  caused  the  bonds 
of  the  Government  to  advance  in  the  market,  and  it 
seemed  to  be  a  favorable  time  to  offer  the  remainder  of 
the  bonds  authorized  by  the  act  of  February  8,  1861. 
Bids  for  eight  millions  of  the  bonds  were  opened  on 
April  2d.  Offers  at  from  9-1  to  par  were  received  for 
$3,099,000,  and  93^  for  the  remainder  of  the  loans.  All 
bids  below  94  were  rejected.  In  tlie  midst  of  these 
negotiations  it  became  known  that  arrangements  were 
being  made  to  send  an  additional  force  for  the  relief  of 
Fort  Sumter.  Xo  additional  bonds  were  sold  until  May 
31st,  when  $7,310,000  were  sold  at  an  average  rate  of 
$85.34  for  $100.  In  place  of  bonds,  five  millions  of 
treasury  notes  were  offered,  and  the  bids  opened  on  April 
11th  amounted  to  only  one  million;  but  shortly  there- 
after the  whole  amount  oifered  was  taken.  On  the  fol- 
lowing page  is  the  form  of  a  $50  note  issued  under  the 
act  of  March  2,  1861.  The  United  States  6  per  cent, 
bonds  were  selling  in  the  market  at  83,  and  money  at  call 
was  worth  from  4  to  5  per  cent. ;  but  the  treasury  notes 
bearing  6  per  cent,  interest  could  be  held  and  used  or  sold 


BEGINNING  OF  TUE  CIVIL  WAR.  83 

at  a  profit  for  the  purpose  of  paying  duties.  Additional 
treasury  notes  of  the  same  kind,  as  has  been  seen,  were 
subsequently  sold,  amounting,  in  all,  to  more  than  thirt}-- 
five  millions,  at  rates  ranging  from  par  to  1  iVti  P^^"  cent. 
premium. 

Civil  war  was  inaugurated  by  the  attack  on  Fort  Sum- 
ter on  April  12th.  The  fort  surrendered  on  April  14th, 
and  on  the  following  day  President  Lincoln  issued  a  call 
for  seventy-five  thousand  soldiers.  The  Southern  States 
were  declared  blockaded.  Seven  of  these  States  had,  by 
ordinances,  publicly  declared  their  secession  from  the 
Union,  and  their  defiance  of  the  national  authority,  and 
a  convention  at  Montgomery,  Alabama,  had  organized  a 
new  government,  under  the  name  of  "  The  Confederate 
States  of  America."  Massachusetts  soldiers,  on  their 
way  to  Washington,  were  attacked  by  a  mob  in  Balti- 
more. In  the  month  of  May  the  Confederate  capital 
was  removed  to  Richmond  ;  North  Carolina  and  Arkan- 
sas seceded,  and  the  Union  army  crossed  the  Potomac 
into  Yirginia,  and  took  possession  of  Alexandria  and 
Arlington  Heights.  In  June,  Tennessee  passed  an  or- 
dinance of  secession,  and  General  Butler  was  defeated 
at  Big  Bethel.  The  two-year  treasury  notes  which  had 
been  recently  issued  at  par  were  at  2|-  per  cent,  discount ; 
and  the  Government,  instead  of  disposing  of  the  notes, 
borrowed  five  millions  at  sixty  days  upon  them  as  col- 
lateral security.  During  the  following  month  the  disas- 
trous results  of  the  first  battle  of  Bull  Run  startled  the 
entire  country.  The  Union  army,  defeated,  fell  back 
upon  Washington,  and  the  capital  of  the  country  was 
believed  to  be  in  danger.  Two  days  thereafter,  Presi- 
dent Lincoln  called  for  five  hundred  thousand  three-year 


84:  UNITED  STATES  NOTES 

volunteers.  An  extra  session  of  Congress  had  been 
called  for  Jnlj  4,  18G1,  and  on  that  day,  amid  events 
like  these,  Secretary  Chase  transmitted  his  first  report 
to  Congress,  which  recommended  measures  to  provide 
the  means  for  continuing  a  civil  war  which  proved  in 
magnitude  to  be  unequalled  in  the  history  of  nations. 

Specie  payments  were  suspended  on  December  28, 
1861.  The  war  was  carried  on  chiefly  by  the  use  of 
treasury  notes  as  a  circulating  medium.  The  purchasing 
po\ver  of  these  notes  rapidly  declined.  Prices  of  all 
kinds  advanced  rapidly,  and  particularly  the  prices  of 
articles  most  needed  for  the  supply  of  the  army.  The 
expenditures  of  the  Government  during  the  four  years 
of  the  war  were  vastly  increased  beyond  the  amount 
which  would  have  been  necessarj^  if  the  war  could  have 
been  conducted  upon  the  gold  standard,  instead  of  upon 
the  fluctuating  standard  of  the  legal  tender  paper  dollar. 

Kever  was  a  great  national  debt  contracted  so  rapidly. 
In  1835,  as  has  been  seen,  the  countiy  was  entirely  out 
of  debt.  General  Lee  surrendei'ed  at  Appomattox,  on 
April  9,  1865  ;  which  date  was  four  years,  lacking  five 
days,  after  Fort  Sumter  had  surrendered  to  the  enemy. 
On  the  first  day  of  July,  1861,  the  debt  was  90  millions  ; 
at  the  close  of  that  fiscal  year  it  had  reached  524  mil- 
lions ;  at  the  end  of  the  succeeding  year,  it  was  consid- 
erably more  than  twice  that  amount,  being  on  July  1, 
1863,  81,119,772,138.  During  the  follownig  year  it  in- 
creased nearly  700  millions.  For  the  next  nine  months, 
to  the  close  of  the  war,  it  increased  at  the  rate  of  about 
sixty  millions  a  month.  An  immense  amount  of  obliga- 
tions against  the  Government  were  presented,  after  the 
close  of  the  war,  and  for  the  five  months  thereafter  the 


TREASURY  NOTES  OF  THE  CIVIL  WAR.  85 

ascertained  debt  increased  at  tlie  rate  of  three  millions 
a  day.  The  cost  of  conducting  the  war,  after  it  was  once 
fully  inaugurated,  was  scarcely  at  any  time  less  than 
thirty  millions  a  month.  At  many  times  it  far  exceeded 
that  amount ;  sometimes  it  was  not  less  than  ninety 
millions  a  month,  and  the  average  expenses  of  the  war, 
from  the  date  of  its  inception  to  its  conclusion,  may  be 
said  to  have  been  not  less  than  two  millions  each  day. 

The  public  debt  reached  its  maximum  on  August  31, 
1S65,  at  which  day  it  amounted  to  $2,845,907,626.56. 
Of  this  amount,  $1,109,568,191  was  in  funded  debt ; 
$1,503,020  was  debt  which  had  matured  ;  and  $2,111,000 
was  in  suspended  requisitions.  The  remainder  was  as 
follows : 

United  States  legal  tender  notes $433,160,569  00 

Compound  interest  legal  tender  notes 217,024,160  00 

Five  per  cent,  legal  tender  notes   33,954,230  00 

Seven-thirty  notes 830,000,000  00 

Fractional  currency 26,344,742  51 

Temporary  loans 107,148,713  16 

Certificates  of  indebtedness 85,093,000  00 

Total $1,732,725,414  67 

There  were  more  than  684  millions  of  these  obligations 
which  were  a  legal  tender,  of  which  217  millions  were 
bearing  compound  interest  at  the  rate  of  6  per  cent. ; 
830  millions  were  in  treasury  notes,  bearing  interest 
at  the  rate  of  7/^-  per  cent,  per  annum.  There  were 
$1,540,483,701  of  treasur}^  notes,  either  payable  on  de- 
mand or  bearing  interest.  If  thetemporary  loans,  which 
were  payable  in  thirty  dayn  from  the  time  of  deposit. after 
iiotice  of  ten  days,  and  the  certificates  of  indebtedness, 


86  UNITED  STATES  NOTES. 

Avliicli  bore  interest  at  0  per  cent.,  payable  one  year  after 
date,  01'  earlier,  at  the  option  of  the  Government,  are  in- 
eluded  with  the  treasury  notes,  the  whole  would  amount 
to  considerably  more  than  three-fifths  of  the  whole  pub- 
lic debt  of  the  country. 

Secretary  Chase,  in  his  report,  estimated  the  whole 
sum  required  for  the  fiscal  year  to  be  not  less  than  318 
millions,  of  which  215  millions  would  be  required  for 
the  war  and  naval  service  ;  more  than  twelve  millions 
(§12,639,861. 61)  to  pay  treasury  notes  due  and  to  be- 
come due,  and  nine  millions  to  pay  interest  upon  the 
proposed  new  debt.  He  M-as  of  the  opinion  that  not 
less  than  eighty  millions  sliould  be  provided  by  taxation, 
and  240  millions  obtained  by  loans.  The  principal  part 
of  the  revenue  was  to  be  obtained  from  the  tanff,  the 
remainder  by  a  system  of  direct  taxation  or  internal 
duties.  Six  per  cent,  bonds,  amounting  to  $18,415,000, 
had  already  been  sold  at  from  par  to  $85.34  for  $100, 
and  treasury  notes  bearing  interest  at  6  per  cent,  had  been 
paid  to  creditors.  He  considered  that  "  in  a  contest 
for  national  existence  and  the  sovereignty  of  the  peo- 
ple, it  is  eminently  proper  that  the  appeal  for  the  means 
of  prosecuting  it  with  energy  to  a  speedy  and  successful 
issue  sliould  be  made,  in  the  first  instance  at  least,  to  the 
people  themselves." 

Among  other  recoroinendations,  he  proposed  a  loan  of 
100  millions,  to  be  '.esued  in  the  form  of  treasury  notes, 
or  exchequer  bills,  bearing  interest  at  the  rate  of  T^\  per 
cent.,  to  be  paid  semi-annually,  and  redeemable  at  pleas- 
ure, after  three  years  from  date.  The  interest  at  this 
rate  M^as  suggested,  because  itAvas  liberal  to  the  subscrib- 
ers, convenient  for  calculation,  and,  under  existing  cir- 


UHA8E  RECOMMENDS  SEVEN-THIRTY  NOTES.     87 

cumstances,  a  fair  rate  for  the  Government.  The  rate 
would  be  convenient  for  calculation ;  for,  the  interest 
being  equal  to  one  per  cent  a  day  on  $50,  two  cents  a 
day  on  $100,  ten  cents  on  $500,  twenty  cents  on  $1,000, 
and  one  dollar  on  $5,000,  it  would  be  only  necessary  to 
consider  the  number  of  days  since  the  date  of  the  note, 
to  determine,  at  the  close,  the  amount  due  on  it.  It  was 
proposed  to  issue  these  notes  in  sums  of  fifty,  one  Inm- 
iired,  five  hundred,  one  thousand,  and  five  thousand  dol- 
lars, with  the  amount  of  interest  for  specified  periods 
engraved  on  the  back  of  each  note,  and  the  facility  thus 
secured  to  the  holder  of  determining  the  exact  aniount 
of  interest,  it  was  thought,  would  enhance  its  value. 
"While  the  rate  proposed  is  thus  liberal  and  convenient, 
the  Secretary  regards  it  also  as,  nnder  existing  circum- 
stances, fair  and  equitable  to  the  Government.  The 
bonds  of  the  United  States,  bearing  an^interest  of  6  per 
cent.,  and  redeemable  twenty  years  after  date,  cannot  be 
disposed  of  at  current  market  rates,  so  that  the  interest 
on  the  amount  realized  will  not  exceed  Ty^y-  per  cent.;  nor 
is  there  any  reason  to  believe  that  treasury  notes,  bearing 
an  interest  of  6  per  cent.,  receivable  for  public  dues  and 
convertible  into  twenty  years'  6  per  cent,  bonds,  can  be 
disposed  of  in  any  large  amounts,  so  that  the  interest  on 
the  sum  realized  will  not  fall  much,  if  at  all,  short  of  the 
rate  proposed.  For  the  difference  of  interest,  if  any,  be- 
tween such  notes  and  those  of  the  proposed  national  loan, 
the  Secretary  thinks  that  the  absence  of  the  feature  of 
receivability  for  public  dues  in  the  latter  is  a  sufificient 
compensation."  He  also  proposed  notes  ot  small  denomi-  ' 
nations,  ten,  twenty,  and  twenty-five  dollars,  payable  one 
year  from  date,  to  an  amount  not  exceeding  fifty  mil- 


88  UNITED  STATES  NOTES. 

lions,  bearing  interest  at  the  rate  of  ^{'{\  per  'U'lit.,  to 
be  exchanged  for  the  other  form  of  treasury  notes,  bear- 
ing interest  at  Y-j\,  or,  if  more  convenient,  made  redeem- 
able in  coin,  on  demand,  without  interest.  "  The  great- 
est care,"  he  said,  "-will,  however,  be  requisite  to  prevent 
the  degradation  of  snch  issues  into  an  irredeemable  paper 
currenc}",  than  which  no  more  certainly  fatal  expedient 
for  impoverishing  the  jnasses  and  discrediting  the  Gov- 
ernment of  any  country  can  well  be  devised." 

Treasuiy  notes  authorized  by  the  acts  of  June  30, 1812, 
February  24,  1815,  and  thi-ee  intervening  acts,  bore  in- 
terest, as  recommended  by  Secretary  Gallatin,  as  has 
been  seen,  at  the  rate  of  5f  per  cent,  a  year,  and  were 
receivable  in  payment  of  all  duties  and  taxes  laid  by  the 
authority  of  the  United  States,  and  for  all  public  lands 
sold  by  said  authority  ;  and  when  so  received,  interest  was 
to  be  computed  at  the  rate  of  "  one  cent  and  one-half  a 
cent  per  day"  on  every  one  hundred  dollars  of  principal, 
each  month  being  I'eckoned  as  thirty  daj's.  It  is  prob- 
able that  the  proposition  for  the  issue  of  the  seven-thirty 
notes  was  obtained  from  this  act,  for  a  substitute  was 
proposed  for  the  legal  tender  act  which  passed  tlie 
House  of  Representatives  February  6,  1862,  which  con- 
tained a  section  providing  for  the  issue  of  transferable 
certificates  bearing  interest  at  the  rate  of  5f  per  cent, 
per  annum. 

These  recommendations  of  the  Secretary  were  em- 
bodied in  the  acts  of  July  17  and  Augitst  5,  1801. 
The  first  was  passed  by  nearly  the  unanimous  vote  of  the 
House,  only  five  votes  (one  from  Kentucky,  two  from 
Missouri,  one  from  Oliio,  and  one  from  Xew  York)  hav- 
ing been  against  it.     It  authorized  the  Secretary  to  bor- 


DEMAND   NOTES  REFUSED.  S?' 

row  250  inillions,  citlicr  in  twenty -year  treasury  notes, 
with  interest  not  exceeding  7  per  cent.,  or  in  seven-thirty 
three-year  treasury  notes,  and  to  issue  demand  notes, 
bearing  no  interest,  and  receivable  for  public  dues. 
Tliese  latter  notes  were  limited  to  fifty  millions,  and  to 
denominations  of  not  less  than  ten  dollars.  But  the  act 
of  August  5th  authorized  the  issue  of  five-dollar  notes; 
also  twenty -year  6  per  cent,  bonds  for  the  amount  of  the 
seven-thirty  notes  issued,  which  bonds  were  to  be  used 
only  in  excliange,  or  for  the  purpose  of  funding  such 
notes.  Under  these  acts,  nearly  140  millions  of  seven- 
thirty  notes  were  issued,  and  sixty  millions  of  demand 
notes,  without  intei-est ;  ten  millions  of  these  notes  hav- 
ing been  authorized  by  the  act  of  February  12,  1862. 

The  first  demand  notes  were  issued  in  August,  and 
paid  for  salaries  at  "Washington.  They  were  received 
with  reluctance,  and  the  merchants  and  shop-keepers 
endeavored  to  discredit  them.  Railroad  corporations 
refused  them  in  payment  of  fares  and  freight ;  and  lead- 
ing banks  in  the  city  of  Kew  York  refused  to  receive 
them  except  on  special  deposit.  The  Secretary  and 
other  ofiicers  of  the  treasury  signed  a  paper  agreeing 
to  accept  them  in  payment  of  salaries.  A  circular  was 
issued  to  the  various  assistant  treasurers,  stathig  that 
treasury  notes  of  the  denominations  of  five,  ten,  and 
twenty  dollars  had  been,  and  will  continue  to  be  issued, 
redeemable  in  coin  on  demand  in  Boston,  New  York, 
Philadelphia,  St.  Louis,  and  Cincinnati.  Gen.  Scott 
also  issued  a  circular  on  September  3,  18G1,  announcing 
to  the  army,  "  that  the  Treasury  Department,  to  meet 
future  payments  to  the  troops,  is  about  to  supph-,  besides 
coin,  treasury  notes  in  five,  ten,  and  tv/enty  dollars,  as 


90  UNITED  STATES  NOTES. 

good  as  gold  in  all  banks  and  GovcrninoTit  ofTices  through 
out  the  United  States,  and  most  convenient  for  tianKniis- 
sion  bv  mail  fi'om  the  officers  and  men  to  their  families 
at  home."  Of  these  notes  §24,550,325  were  issued 
before  December  1st,  and  133,400,000  were  in  circula- 
tion at  the  time  of  the  suspension  of  specie  payment 
on  December  2Sth.  The  whole  amount  authorized  was 
issued  prioi-  to  April  1,  1802.  On  page  91  is  the  form 
of  the  demand  note,  the  size  of  which  was  precisely  the 
same  as  the  greenback,  now  in  circulation.  Notwithstand- 
ing the  circular  of  the  Secretary,  it  became  necessary  to 
use  the  available  coin  in  payment  of  the  interest  upon 
the  public  debt,  and  there  was  at  times  some  difficulty 
in  redeeming  the  notes  promptly  in  gold. 

Z'     At  a  meeting  of  the  associated  banks  in  the  city  of 
Kew  York,  in  January,  1862,  it  was  resolved,  "That 

)  before  we  receive  such  notes,  we  must  require  that  snch 
legal  provision  be  made  by  Congress  as  shall  insure  their 
speedy  redemption,  and  that  a  committee  of  the  associa- 
tion be  appointed  to  consider  the  subject  and  report  on 
it  at  an  adjourned  meeting."  The  notes  were  receivable 
for  duties,  and  soon  obtained  good  credit.  After  the 
suspension  of  specie  payment,  efforts  Avere  made  to  retire  ' 
them  as  rapidly  as  possible,  for  as  they  were  receivable 
for  duties,  they  embarrassed  the  Government  in  provid- 
ing for  the  gold  interest  upon  the  public  debt.  On 
July  1,  1863,  more  than  fifty-six  millions  had  been  re- 
tired, and  a  much  larger  amount  of  legal  tender  notes 
had  been  placed  in  circulation.  The  demand  notes 
were  not,  by  the  terms  of  the  law,  made  payable  in  gold, 
but  as  they  were  authorized  prior  to  the  suspension  oi 
specie  payment,  and  proclaimed  as  payable  in  coin  by  the 


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SEVEN-THIRTY  LOAN  OF  18G1.  93 

circular  of  the  Secretary,  tliey  were  considered  so  pay- 
able, and,  after  the  suspension  of  specie  payment,  were 
quoted  at  times  at  about  the  same  premium  for  legal- 
tender  notes  as  gold. 

Interest  upon  the  first  issue  of  the  seven-thirty  notes 
was  paid  in  gold.  These  notes  were  fundable  into  twent}^- 
year  6  per  cent,  bonds  of  1881,  and  but  few  were  pre- 
sented for  pajanent.  The  amount  redeemed  in  money 
to  November  1,  1864,  was  only  $63,500,  while  the  whole 
amount  converted  into  bonds  to  that  date  was  $125,864,- 
900.'  The  seven-thirty  loan  was  successfully  negotiated 
through  the  associated  banks  of  Xew  Yoi'k,  who,  jointly 
with  the  banks  of  Boston  and  Philadelphia,  made  a  con- 
tract with  the  Secretary  on  August  15,  1861,  for  tlie 
purchase  of  Government  securities  to  the  amount  of  150 
millions,  in  three  different  instalments.  The  total 
amount  taken  by  the  New  York  banks  was  105  millions. 
Whenever  subscriptions  were  made,  10  per  cent,  was 
paid  to  the  Assistant  Treasurers  in  New  York,  Boston, 
and  Philadelphia,  and  the  remainder  was  placed  to  the 
credit  of  the  United  States  on  the  books  of  the  banks 
subscribing.  The  arrangement  of  tl;e  associated  banks 
among  themselves  was  to  issue  certificates  to  each  sub- 
scriber, stating  the  amount  so  subscribed,  and  placed  to 
the  credit  of  the  Government ;  and,  as  such  deposits 
w^ere  withdrawn,  or  paid  into  the  treasury,  seven-thirty 
notes  were  issued  for  the  same  amount  to  the  subscribers 
respectively.  An  immediate  issue  w\as  to  be  made  of 
seven-thirty  treasury  notes,  dated  August  15,  1861,  to 
the  extent  of  fifty  millions,  bearing  interest  from  that 

•  Finance  Report,  18G4,  p.  10. 


94  UNITED  STATES  NOTES. 

date.  The  associated  banks  were  to  take  jointly  tliis 
amount  at  par,  ^-ith  the  privilege  of  iifty  millions  on 
October  15th,  and  iifty  millions  on  December  15tli ;  the 
banks  ii;iving  their  decision  on  the  iirst  days  of  these 
months.  It  was  understood  that,  if  the  whole  amount 
should  be  taken,  no  other  Government  stock  or  treasury 
notes,  except  demand  notes,  should  be  negotiated  or  paid 
out  by  the  treasury  until  February  1, 1862,  The  details 
of  this  negotiation,  which  was  perhaps  the  most  impor- 
tant one  during  the  war,  are  given  in  the  Bankers'  Mag- 
azine for  September,  1861,  and  August,  1862. 
^  The  report  of  June  12,  1862,  of  the  Loan  Committee 
of  the  Associated  Banks  of  Kew  York,  states  that,  at  the 
time  the  negotiation  was  made,  "  the  credit  of  the  Gov- 
ernment had  become  impaired  to  such  a  degree  that  a 
large  loan  could  not  be  obtained  in  any  ordinary  way, 
nor  even  a  small  temporary  loan,  except  for  a  very  short 
period  at  a  high  rate  of  interest.  Men's  hearts  failed 
them  ;  the  rebellion  was  on  so  large  a  scale,  and  had  so 
unexpectedly  broken  out  and  raged  with  such  fury,  that 
to  subdue  it  seemed  to  most  persons  to  be  impossible. 
Then  it  was,  after  careful  deliberation  and  consultation 
Avith  the  SecretaiT,  that  the  baidcs  decided  it  to  be  wise 
for  them  to  depart  from  their  usual  legitimate  business, 
and  sustain  the  Government  credit,  and  stand  or  fall  with 
it.  This  act  restored  the  public  confidence,  and  was  the 
highest  indorsement  of  the  public  credit  that  could  then 
have  been  given.  *  *  When  the  banks  agreed  to 
advance  this  large  amount  to  the  Government,  they 
did  so  without  hope  or  expectation  of  profit  from  it,  and 
they  earnestlj^  sought  to  obtain  from  the  Govermnent 
the  assurance  that  they  should  be  indemnified  from  loss. 


REPORT  ASSOCIATED  BANKS  OF  NEW  YORK.       95 

It  was  not  nntil  five  montlis  after  taking  the  first  loan, 
and  two  months  after  taking  the  tliird,  in  the  month  of 
January  last,  that  there  was  any  reason  to  expect  the 
securities  to  command  in  the  market  a  price  higher 
than  that  at  which  they  had  heen  taken.  *  *  Much 
douht  was  expressed,  even  by  our  most  experienced  bank- 
ers and  financiers,  when  the  contract  was  entered  into, 
of  the  ability  of  tlie  banks  fo  fulfil  it.  It  has  been  ful- 
filled by  them  to  the  letter,  and  has  proven  of  more 
value  to  the  country  than  can  be  estimated.  As  foitu- 
nately  as  unexpectedly,  it  has  resulted  profitably  for  the 
associates,  and  has  probably  enabled  them  to  employ 
their  means  to  nearly  as  much  advantage  as  would  have 
been  done  but  for  the  political  disturbances  of  the 
country." 

Secretary  Chase,  in  his  report  for  December  9,  1861, 
thus  refers  to  this  negotiation  :  "  Representatives  from 
the  hanking  institutions  of  the  three  cities,  responding 
to  his  invitation,  met  him  for  consultation  in  New  York, 
and  after  full  conference,  agreed  to  unite  as  associates 
in  moneyed  support  to  the  Government,  and  to  subscribe 
at  once  a  loan  of  fifty  millions  of  dollars,  of  which  five 
millions  were  to  be  paid  immediately  to  the  Assistant 
Treasurers,  in  coin,  and  the  residue,  also  in  coin,  as 
needed  for  disbursement.  The  Secretary,  on  his  part, 
agreed  to  issue  three-year  seven-thirty  bonds,  or  treas- 
ury notes,  bearing  even  date  with  the  subscription,  and 
of  equal  amount ;  to  cause  books  of  subscription  to  the 
national  loan  to  be  immediately  opened  ;  to  reimburse 
the  advances  of  the  banks,  as  far  as  practicable,  from 
this  national  subscription  ;  and  to  deliver  to  them  seven- 
thirty  bonds,  or  treasury  notes,  for  the  amount  not  thus 


06  UNITED  STATES  NOTES. 

reiinbnrsed.  It  was  further  understood,  that  the  Secre- 
tary of  tlic  Treasury  should  issue  a  limited  amount  of 
United  States  notes,  payable  on  demand,  in  aid  of  the 
operations  of  the  Treasury,  and  that  the  associated  insti- 
tutions, when  the  first  advance  of  fifty  millions  should  l)e 
expended,  would,  if  practicable,  make  another,  and,  when 
that  should  be  exhausted,  still  another  advance  to  the 
Government  of  the  same  amount,  and  on  similar  terms. 
*  *  All  these  objects  were  happily  accomplished. 
Fifty  millions  of  dollars  were  immediately  advanced  by 
the  banks.  The  Secretary  caused  books  of  subscription 
to  be  opened  throughout  the  country,  and  the  people 
subscribed  freely  to  the  loan.  The  amounts  thus  sub- 
scribed were  reimbursed  to  the  banks,  and  the  sum  re- 
imbursed, though  then  covering  but  little  more  than 
half  the  amount,  enabled  those  institutions,  when  a 
second  loan  was  required,  to  make  a  second  advance  of 
850,000,000.  Thus,  two  loans,  of  850,000,000  each, 
liave  been  negotiated  for  three-year  seven- thirty  bonds, 
at  par.  The  first  of  these  loans  was  negotiated,  and  the 
first  issue  of  bonds  bears  date,  August  19,  the  second 
October  1,  1861." 

On  November  16th,  a  third  loan  was  negotiated  with 
the  associated  institutions,  under  the  seventh  section  of 
the  act  of  August  5,  1861,  the  Secretary  agreeing  to 
issue  to  them  fifty  millions  of  dollars  in  6  per  cent, 
bonds,  at  a,  rate  equivalent  to  par,  for  bonds  bearing  7 
per  cent,  interest,  authorized  by  the  act  of  July  IT,  1861. 

The  following  table  gives  quotations  of  United  States 
5  and  6  per  cent,  bonds,  of  treasury  notes  and  of  gold,  at 
the  dates  stated,  compiled  from  tables  in  Hunt's  Mev 
chants^  Magazine  for  1862-63-64. 


I 


QUOTATIONS  OF  BONDS,  NOTES,  AND  GOLD.       07 


Yeap.b  and  Months. 


18()2. 
February  5 
March  1 

April  1 

May  30 

June  7 

July  5 

AuKiist  2 

September  (i 
October  4 
November  1 
December     G 

18C3. 
Jannarj'  3 
February  7 
March  7 

April  4 


May  2. 

June  6. 

July  1 1 . 

August  1 

September  5. 
October  3. 
November  7. 
November  27. 
1864. 
January  2. 
February  6. 
March  5 . 


6V,  1801. 


S:  ^"'-'- 


April  2 

May  7 

June  4 

July  11 

August  6 

September  3 

October  1 

November  5 

December  12 


m)4 
9:i 

lO.'i 

lUdH' 

]0.1>^ 

104 

101 

92 
99 '4- 

104^ 


1(B3<^ 
104 

1(141^ 

HM% 

KJfi 

107 

108 

108 

104?^ 
107 '4 

nv4 
111 

113 

109 

106  L^ 

107 

lOfi 

1073^ 

108>9' 


P9 

t*2>^ 

9.J 
105 
106 
lOO'i 

9S>^ 

99'^' 
]04j^ 
1W34 
104 


10034 
105 


106% 
108  i^ 
105 
105';^ 
106 

109 

lOO 

105,V 

107i^ 

111 

110 

113 

113!:^ 

102?:i- 
10.51^ 
107 

m\}4 

108?^ 


0! 

M    t 

B    « 

"S 

o  a 

5  S 

in 

tP 

So 

'^f^Vi 

>-'5;tf 

9!»>^ 

87 

«tji 

965^' 

»1 

104 

99% 

100'^ 

!I6 

106)^ 

1001^^ 

101 

m 

102 

98^'^ 

1051^ 

85!^ 

Wiy, 

^y 

W.b}i 

88>? 

1031-4^ 

99 

108 

94 

105U 

94 

122;^ 

Vf^H 

]05« 

991^ 

126'.^ 

91 /'l? 

104 

97>^ 

125 

8S^ 

102M 

%'i-i 

129 

85  .'^ 

102 

94 

155 

913^ 

105 

^y 

153 

973^ 

104,5^ 

99 

1  Yekr 
Certifi- 
cate.s 
New. 

my. 

ms% 

102 

my 

<>9 

107 

101 5^: 

VTi^ 

97}^ 

106 

100  ?i 

98?< 

96>^ 

106;^ 

101 

99% 

95 

106 

100'^ 

«9% 

95 

106  >:i 

lon^ 

99  ?i 

98 

107 

101>^ 

98% 

1» 

imy 

101><< 

98 

96 

106X 

my 

W5^ 

io:> 

108 

1025^ 

98?^ 

100 

111 

103M 

99% 

100 

111 

99M 

102 

iwy 

i>8>i 

102 

1093;i 

98 

102 

KS}4 

94  >^ 

99 

my 

m}4 

100 

111 

93% 

103 

1103i 

94  Ji 

100 

iiiGK 

953« 

100 

12U 

97M 

]02i^ 

102 

103% 

104  Jg 

109% 

115  !< 

1193^ 

123 

131 3^ 

132 

134)^ 

ir.7% 

l."i5>^ 

1553:^ 


i.-^o;^ 

145% 
1323^ 
1293< 

131M 
143% 

uoy 

152 

159  5^ 

161% 

166?^ 

l'<2% 

191 

i;85 

243^ 
193^4 
214?^ 
237X 


About  three  years  after  the  passage  of  tlie  act  author- 
izing tlie  first  issue  of  seven-thirty  notes,  another  act 
was  passed,  on  June  30,  1864,  authorizing  200  millions 
of  similar  notes,  and  a  subsequent  act  of  March  3,  1865, 
authorized  (>00  luillions  in  addition,  and  under  this  act 
the  whole  amount  (including  $29,992,500 of  reissues),  was 
5 


08  UNITED  STATES  NOTES 

issued.  Of  this  ainoiuit  forty-four  uiillious  were  in  de- 
nominations of  fifty  dollars  ;  137  millions,  in  one  hun- 
dreds ;  2:28  millions,  in  five  hundreds;  370  millions,  in  one 
thousands;  and  about  fifty  millions,  in  five  thousands. 
They  M-erc  issued  in  three  series,  dated  x\ugnst  15,  1864, 
June  15,  1865,  and  July  15,  1865.  These  notes,  like 
those  that  preceded  them,  Avere  fundable  into  0  ])er 
cent,  bonds — the  former  into  eighty-ones,  and  the  latter 
into  five-twenties — and  this  fact  M-as  printed  upon  the 
reverse  of  each  note.  The  800  millions  last  issued  Mere 
payable,  principal  and  interest,  in  la\vf ul  money.  More 
than  twenty  millions,  which  wei'e  authorized  by  the  act  of 
June  20, 1864,  were  paid  to  the  soldiers  direct.  Of  the  600 
millions,  authorized  by  the  act  of  March  3, 1865,  seventy 
millions  wei'e  issued  during  that  month,  and  the  whole 
remainder  was  taken  during  the  following  four  months. 
Secretary  McCulloch,  in  his  report  for  December  4, 
1865,  thus  refers  to  the  negotiations  and  issue  of  the 
remaining  530  millions  of  these  notes:  "Upon  the 
captui-e  of  liichmond,  and  the  surrender  of  the  Confed- 
erate ai'uiies,  it  became  appai'ent  that  there  M'ould  be  an 
early  disbanding  of  the  forces  of  the  United  States,  and 
consequently  heavy  requisitions  from  the  AVar  Depart- 
ment for  transportation  and  payment  of  the  army,  in- 
cluding bounties.  As  it  was  important  that  these 
requisitions  should  be  promptly  met,  and  especially  im- 
portant that  not  a  soldier  should  remnin  in  the  service  a 
single  day  for  want  of  means  to  pay  him,  the  Secretary 
perceived  the  necessity  of  realizing  as  speedily  as  pos- 
sible the  amount— $530,000,000— still  authorized  to  be 
borrowed  under  this  act.  The  seven  and  three-tenths 
notes  had  proved  to  be  a  popular  loan,  and  although  a 


SEVEN- THIRTIES  OF  1864-5.  99 

secni'ity  on  longer  time  and  lower  interest  would  have 
been  more  advantageous  to  the  Government,  the  Secre- 
tary considered  it  advisable,  under  the  circumstances,  to 
continue  to  offer  these  notes  to  the  public,  and  to  avail 
himself,  as  his  immediate  predecessors  had  done,  of  the 
services  of  Jay  Cooke,  Esq.,  in  the  sale  of  them.  The 
result  was  in  the  highest  degree  satisfactor3^  By  the 
admirable  skill  and  enei'gy  of  the  agent,  and  the  hearty 
co-operation  of  the  national  banks,  these  notes  were  dis- 
tributed in  eveiy  part  of  the  Xorthei'n  and  some  parts  of 
the  Southern  States,  and  placed  within  the  reach  of  every 
person  desiring  to  invest  in  them.  No  loan  ever  offered 
in  the  United  States,  notwithstanding  the  large  amount 
of  Government  securities  previously  taken  by  the  people, 
was  so  promptly  subscribed  for  as  this.  Before  the 
first  of  August  the  entire  amount  of  $530,000,000  had 
been  taken,  and  the  Secretary  had  the  unexpected  satis- 
faction of  being  able,  with  the  receipts  from  customs 
and  internal  revenue  and  a  small  increase  of  the  tem- 
porary loan,  to  meet  all  the  requisitions  upon  the  treas- 
ury." 

On  page  101  is  the  form  of  the  seven-thirty  note 
issued  under  the  act  of  March  3,  18G5,  with  one  coupon 
attached. 

The  whole  half  3'ears  interest  was  payable  with  the 
note,  and  there  were  five  coupons  upon  the  right  end  of 
the  note.  The  size  of  the  note  was  3|  by  11^  inches,  in- 
cluding the  coupons,  which  were  3^  inches  in  width.  On 
the  revei'se  was  printed  these  words  :  "  Pay  to  bearer. 
At  maturity  convertible  at  the  option  of  the  holder  into 
bonds  redeemable  at  the  pleasure  of.  the  Government,  at 
any  time  after  five  years,  and  payable  twenty  yeai's  from 


100  UNITED  STATES  NOTES. 

Jnlv  15,  ISGS,  Avith  interest  at  0  per  cent,  per  annum, 
pavable  seuii-anniially  in  coin." 

During  the  month  of  Julv,  1802,  gold  was  at  a  pre- 
mium for  legal  tender  notes  of  from  10  to  15  per  cent., 
and  demand  notes,  which  were  receivable  for  customs,  at 
a  premium  of  about  8  per  cent.  The  subsidiary  silver 
coinage  authorized  by  the  act  of  February  21,  1853,  was 
about  7  per  cent,  less  in  intrinsic  value  than  the  silver 
dollar,  and  this  difference  in  weight  was  authorised,  so 
that  it  might  be  retained  in  the  country  for  purposes  of 
change.  This  silver  coin  soon  began  to  disappear.  Con- 
siderable amounts  were  hoarded  in  the  Xorth  and  South, 
and  larger  amounts  were  exported  to  Canada  and  South 
America ;  and  a  premium  of  from  10  to  13  per  cent, 
was  offered  for  small  amounts  by  business  men  who  de- 
sired it  for  convenience  in  making  change.  Many  in- 
dividuals as  well  as  corporations  issued  small  obligations, 
or  "  shinplasters,"  such  as  had  been  issued  in  1812  and 
1837.  Postage  stamps  were  used  to  a  considerable  ex- 
tent for  purposes  of  change.  The  Postmaster-General, 
in  his  report  of  December,  1862,  says:  "In  the  first 
quarter  of  the  current  year,  ending  September  20th,  the 
number  of  stamps  issued  to  postmasters  was  one  hundi-cd 
and  four  millions;  there  were  calls  for  about  two  liun- 
dred  millions,  which  would  have  been  nearly  sufficient 
to  meet  the  usual  demand  for  a  year.  This  extraordi- 
nary demand  arose  from  the  temporary  use  of  these 
stamps  as  a  currency  for  the  public  in  lieu  of  the 
smaller  denominations  of  specie,  and  ceased  with  the 
introduction  of  the  so-called  '  postal  currency.'  '' 

On  July  17, 1862,  an  act  was  passed  which  authorized 
the  issue  of  "  postage  and  other  stamps  of  the  United 


Pay  Hearer  f  1.82^-11'0  JaiV'y  15tA  1868  for  hth  nixmonths  interest  on 

^ix  per  cent 
$60  U.  S.  Treas'y  Note  No.  123,150  JF.  £!,  Sphiner. 

Gold  Option     Treaa.  uf  tlie  U.  S. 


s.s 


'umuuv  j,9d 

}V9Q    J,9d  XtS    fo    9}VJ,    9111    %V    910}^    m[%    UO   '}S9J,9fU}    911} 

utoQ  m  duifivd  fo  pifiui  axii  ii9dx9S)j,  }U9muu,9aof)  9i[j^ 
■t,'98 i  Vi  UOMji[  /opy  H 

0£^  09  09  E 


POSTAGE  STAMPS-POSTAGE  CURRENCY.      103 

States  ;"  which  were  receivable  in  exchange  for  United 
States  notes,  and  in  payment  of  all  dues  to  the  United 
States,  in  sums  of  not  less  than  five  dollars.  Under  this 
law,  notes  of  the  denominations  of  5, 10,  25  and  50  cents 
were  issued,  and  the  denominations  of  5  cents  were 
printed  on  brown  tinted  paper,  witli  an  engraved  head  of 
Jefferson,  which  was  the  exact  counterpart  of  that  used 
on  the  five-cent  postage  stamp.  On  the  twenty-five- 
cent  note  the  head  of  Jefferson  was  five  times  repeated. 
The  form  and  size  of  these  notes  are  given  on  pages 
105-7.  The  ten-cent  note  was  printed  in  green,  with 
the  head  of  Washington,  the  counterpart  of  that  used  on 
the  ten-cent  postage  stamp.  Upon  the  fifty-cent  note 
this  vignette  was  five  times  repeated.  The  form  and  size 
of  the  ten-cent  and  fifty-cent  notes  are  given  on  pages 
106-8.  These  notes  were  issued  in  the  month  of  August, 
1862,  and  were  termed  "  postage  currency,""  and  continued 
in  use  until  they  were  replaced  by  the  fractional  currency 
authorized  by  section  four  of  the  act  of  March  3,  1863. 
The  previous  act  prohibited  private  corporations,  bank- 
ing associations,  and  individuals  from  issuing  or  circulat- 
ing notes  for  fractions  of  a  dollar,  and  imposed  a  pen- 
alty, upon  conviction,  of  a  fine  not  exceeding  five 
hundred  dollars,  and  imprisomnent  not  exceeding  six 
months.  The  law  did  not  prohibit  the  issue  of  frac- 
tional currency  by  cities,  and  considerable  amounts  were 
placed  in  circulation  by  various  municipalities,  notwith- 
standing that  in  many  of  the  States,  laws  had  been 
passed  in  the  year  1837,  or  prior  thereto,  prohibiting 
such  issues. 

The   amount   of   fractional  currency  \vas  limited   to 
fifty  millions   of   dollars,  and   denominations    of   from 


1<»4:  UNITED  STATES  NOTES. 

three  cents  to  fifty  cents  were  issued,  wliich  were  ex- 
changeable for  United  States  notes  in  sums  of  not  less  than 
three  dolhirs.  On  the  days  on  which  this  small  currency 
was  first  issued  to  the  public,  the  offices  of  the  Assistant 
Treasurer  in  New  York  and  in  other  cities  were  thronged 
with  long  lines  of  people  anxious  to  obtain  this  paper 
currency  to  supply  the  deficiency  caused  by  the  with- 
drawal of  silver  coin.  On  account  of  the  scarcity  of  one 
and  two-dollar  notes  and  of  fractional  currency,  whole 
sheets  of  these  notes,  when  they  were  first  issued,  were 
paid  to  the  army,  and  subsequently  were  so  cut  that 
four  25-cent  notes  were  used  in  place  of'  a  one-dollar 
note,  and  four  fifty-cent  notes  in  place  of  a  two  dollar 
note,  and  in  this  form  considerable  amounts  were  paid 
out.  These  notes  were  universally  used  for  small  change 
in  and  out  of  the  army.  The  total  issue  of  "  postage  cur- 
rency," which  commenced  August  21,  1862,  and  ceased 
May  27,  1863,  was  $20,215,635.  $^,282,082  was  out- 
standing on  April  1, 1884,  of  which  $1,028,332  was  in  de- 
nominations of  five  cents;  $1,243,974  in  ten  cents;  $1,- 
039,203  in  twenty -five  cents,  and  $970,572  in  denomina- 
tions of  fifty  cents.  The  total  amount  of  issues  and 
reissues  under  both  acts  was  $368,720,074.  These  little 
notes  were  stuffed  in  the  trowsers  pocket  of  the  soldier, 
with  the  jack-knife,  the  cartridge,  the  plug  of  tobacco, 
and  other  handy  articles,  and  soon  became  imfit  for  cir- 
culation. They  wore  out  rapidly  and  became  ragged  and 
filthy,  and  were  frequently  returned  for  redemption. 

The  first  issues  under  the  act  of  March  3  commenced 
on  October  10,  1863,  and  ceased  on  February  15,  1876 ; 
and  an  act  was  passed  on  April  17th,  of  the  latter  year, 
directing  the  Secretary  to  replace  this  circulation  by  the 


[obverse.] 

POSTAGE    CUMMENCT 

Furnished  only  by  the  Assistant 
Treasurers  and  Designated  Dejiasitaries  of  the  U.  S. 

— .          [■    U.S.  Postage    1           _. 

\   Five  <;eiits   ^ 

EECEIVABLE  FOE      (  TT   C    (      POSTAGE  STAMPS 
At  Any                1  U.O.  )           PobX  Office. 

[rever.se.] 

EXCHANGEABLE  FOR  UNITED  STATES  NOTES 

By  any  Assistant      C  =          g         cj         Treasurer  or 
designated  U.  S.       \             r-             1        Depositary  in 

Receivable  in          f  5         5         5  5      payment  of  all 

dues  to  the  U.  States  less  than  V\\lt  DO\.\.kRS. 
ACT   APPROVED   JULY    17,    1862. 

[oirVTRSE.] 

POSTAGE    CUMMJEWCT 

Furnished  only  by  the  Assistant 

Treasurers  and  Designated  Dej>ositaries  of  the  U.  S. 

<   p>           \    ^-S.  Postage   b           . 

^                             &.           K   WASHINGTON'S  HEAO      ;          &                           fe. 

^  ^              [|    Ten  Cents     ■"            ^  ^ 

|u.          s.| 

ESCEI7ABLE  POS       (IT  Q    I      POSTASE  STAMPS 
At  Any                 (  U  .  O.  )           Pust  Office. 

[reverse.] 

EXCHANGEABLE  FOR  UNITED  STATES  NOTES 

By  any  Assistant     f  v     ^g, ^j      y  5        Treasurer  or 
designated  U.  S.     \  ?,     A   r\    -^  \       Depositary  in 
sutnstietlessthun     >  ^     1  U    ^  *     VWJt  t)0\.\.NRS. 
^  Receivable  in          f^     ''''■^      ^5      piyment  of  all 

1 

1 

duet  to  the  U.  States  less  than  9\\)t  QO\.\.NRS. 

ACT   APPROVED    JULY    17,    1862. 

[obverse.] 

POSTAGJE    CUMUJEWCT       OK 

Furnished  otily  hy  the  Assistant 
Treasurers  and  Designated  Depositaries  of  the  U.  S, 

\ 


This 
design 


RECEIVABLE    FOR 

At  Any 


:s         5| 

U.  S.  Postage   % 

r    JEFFERSON'S    HEAO     fl 

I   Five  Cents   \ 


U.S. 


appears 
five  times. 


POSTAGE  STAMPS 
Post  Office. 


[reverse.] 

EICHAUGEABLE  FOR  MTED  STATES  UOTES 

By  any  Assistant       _^        _, 

Treasurer  or 

Designated  U.  S.     4  f    ^^ 

Depositary  in 

sums  not  less  than      ^j  m    f 

WW.  QOVLKRS, 

Receivable  iti 

payment  of  all 

dues  to  the  U.  States  less  tha 

'  V\\lt   00\.\.kKS. 

»CT  Approved,  July  17, 

1862. 

[obverse.] 


tKC\      JPOSTAGE    CUjBMENCY       KCi 

Furnished  only  by  the  Assistant 

Treasure} 

r  and  Designated  Deposi 

taries  0/  the  U,  S, 

This 
design 

1^  U.  S.  Postage  [ 

;  WASHINGTON'S    HEAD  , 

c    Ten  Cents    \ 

\\i-          s.  * 

appears 
five  times. 

RECEIVABLE 
At   Any 

'°"     1  U.S.I 

POSTAGE    STAMPS 
Post   Office. 

[reverse. 

] 

EXCHANGEABLE  FOR  Wm  STATES  NOTES 

By  any  A  ssistnnt 

Treasurer  or 

desig7iated  U.  S.       L^  /     | 

Depositary  in 

sums  tiot  less  than     »  )\  / 

V\Mt  QOVLNUS. 

Receivable  in 

paymetit  0/  all 

dues  to  the  U.  States  less  than  ^\\i\_  QO\.\.N^S.                          1 

Act  approved,  July 

7,  1862. 

FRACTIONAL   CURRENCY.  109 

issue  of  subsidiary  silver  coin.  The  fractional  paper 
currency  was  issued  in  five  different  series.  Tlie  high- 
est amount  outstanding  at  any  one  time  was  less  than  fifty 
millions.  Tlie  amount  outstanding  on  October  1,  1S87, 
was  $15,319,885.  A  considerable  amount  is  still  held 
by  banks  and.  bankers,  M'hich  is  grudgingly  paid  out  to 
those  customers  who  desire  it  for  purposes  of  remittance 
by  letter.  The  principal  portion  of  the  amount  out- 
standing will  probably  never  be  presented  for  redemp- 
tion. The  proportion  of  loss  to  the  people  from  this 
fractional  currency  is  vastly  greater  than  that  of  any 
other  kind  of  circulation  ever  issued  in  this  country,  and 
this  loss,  in  a  large  measure,  must  be  attributed  to  the  small 
value  of  the  notes  and  the  many  casualties  of  the  war. 
The  proportion  of  legal  tender  notes  and  national  bank 
notes,  of  the  highest  amount  outstanding  at  any  one  time, 
not  presented  for  redemption,  or  lost,  in  the  coui'se  of 
twenty  years,  is  estimated  at  about  1|-  per  cent. 

Authority  was  given  by  the  second  section  of  the  act 
of  March  3,  1863,  to  issue  400  millions  of  ti'easury 
notes,  bearing  interest  at  a  rate  not  exceeding  six  per 
cent,  in  lawful  money  for  a  term  not  exceeding  three 
years,  payable  at  periods  expressed  on  their  face,  and  in 
denominations  of  not  less  than  ten  dollars.  These  notes 
were  exchangeable,  together  with  the  accumulated  in- 
terest for  treasury  notes  not  beai'ing  interest.  They 
were  made  legal  tender  for  their  face  value,  excluding 
interest.  Power  was  also  given  to  the  Secretary  to  issue 
150  millions  of  additional  greenbacks,  which  M^ere  to  be 
issued  oidy  in  exchange  for  these  interest-bearing  notes. 
Under  this  act,  $-ll:,520,000  notes  were  issued,  redeem- 
able one  year  from  date,  and  $166,480,000  two  years 


no 


UNITED  STATES  NOTES. 


from  date,  bearing  interest  at  5  per  cent,  per  ainmni, 
Avhicli  were  known  as  "  one  and  two  year  notes  of  1SG3." 
Antlioritj  Avas  given  by  the  act  of  June  30,  18G4,  for 
the  issue  of  200  millions  of  treasury  notes  in  denomina- 
tions of  not  less  than  ten  dollars,  not  exceeding  three 
years,  and  bearing  interest  not  exceeding  7.30  per  cent, 
per  annum,  interest  payable  semi-annually,  principal  and 
interest  to  be  paid  in  lawful  money.  The  notes  were 
to  be  a  legal  tender  for  their  face  value.  Ko  seven- 
thirty  notes  were  issued  under  this  act,  but,  in  lieu  there- 
of, $266,595,44:0  of  compound  interest  notes  were  issued. 
The  act  did  not  authorize  in  terms  the  issue  of  compound 
interest  notes,  but  as  the  interest  at  six  per  cent,  com- 
pounded, would  be  considerably  less  than  at  7.30  per  cent, 
simple  interest,  their  issue  was  not  in  conflict  with  the 
terms  of  the  act.  The  notes  Avere  of  the  form  shown  on 
pages  111-112.  The  size  of  these  notes  was  3^  by  7^ 
inches.  Of  these  notes,  $177,045,770  were  issued  in  re- 
demption of  the  one  and  two  year  five  per  cent,  notes, 
and  it  is  not  probable  that  more  than  200  millions  of 
these  notes  were  outstanding  at  any  one  time.  Secre- 
tary Fessenden,  in  his  report  for  December  6,  1864, 
thus  refers  to  the  issue  of  these  notes :  "  The  M-hole 
amount  of  national  circulation,  not  bearing  interest,  ex- 
clusive of  fractional  curi-ency,  and  of  notes  issued  by 
national  banks,  is  limited  to  four  hundred  millions  of 
dollars,  subject  to  slight  occasional  increase  from  the  fifty 
millions  held  in  reserve  for  the  payment  of  temporai-y 
deposits.  Of  five  per  cent,  interest-bearing  notes  there 
were  outstanding,  on  the  first  of  November  last,  $120,- 
519,110.  To  a  considerable  extent  these  notes  have  been, 
and  will  continue  to  be,  used  as  currency.     Those  with 


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THREE  PER   CENT.    CERTIFICATES.  113 

conpons  have  been  found  particularly  objectionable,  as, 
thoug-li  witlidrawn  to  a  certain  extent  while  the  interest 
is  maturing,  they  are  liable  to  be  periodically  rushed 
upon  the  market.  In  consideration  of  this  feature,  a 
large  amount,  viz.,  about  ninety  millions  of  the  original 
issue  of  one  hundred  and  fifty  millions  of  these  coupon 
notes,  have  been  withdrawn  and  destro_yed,  and  their 
place  occupied  by  notes  payable  in  three  years,  bearing 
interest  at  six  per  centum,  compounded  semi-annually. 
This  is  believed  to  be  the  best  form  of  interest-bearing 
legal-tender  notes,  as  being  more  likel}^  to  be  withdrawn 
and  held  until  maturity,  as  an  investment.  Of  these, 
fifteen  millions  in  amount  were  issued  under  the  act  of 
March  3,  1S63,  and  about  ninety  millions  under  the  act 
of  June  30,  18G4.  The  total  amount  of  interest-bearing 
notes  outstanding  on  the  22d  of  November  last  was  $210,- 
222,870.  What  proportion  of  these  may  be  considered  as 
an  addition  to  the  circulation  I  am  unable  to  determine. 
To  that  extent,  whatever  it  may  be,  they  contribute  to 
the  amount  of  the  currency,  and  thus  in  some  degree 
occasion,  and  in  still  greater  degree  sustain,  an  increase 
of  prices,  and  depress  values." 

About  two  years  and  eight  months  after  the  passage 
of  the  last  act,  authority  was  given  for  the  issue  of  tem- 
porary loan  3  per  cent,  certificates,  for  the  purpose  of 
retiring  the  compound  interest  notes.  When  these  latter 
notes  were  issued,  it  was  expected  that  they  would,  as  the 
interest  accumulated,  soon  pass  out  of  circulation  into  the 
hands  of  bankers  and  capitalists.  These  expectations 
were  realized,  for  the  interest  was  only  payable  at  ma- 
turity, three  years  from  date.  Such  notes,  with  accrued 
interest,  would  not  be  paid  out  by  the  holders  except  va 


114  UNITED  STATES  NOTES 

cases  of  absolute  necessity.  In  order  to  insure  the  re- 
tirement of  these  notes,  "  An  act  to  provide  ways  and 
means  for  the  payment  of  compound  interest  notes," 
was  passed  on  March  2,  1867.  This  act  authorized  the 
issue  of  3  per  cent,  certificates  in  denominations  of  not 
less  than  Sj^lOO,  payable  on  demand.  The  national  banks 
wei'e  authoi'ized  to  hold  these  certificates  as  a  part  of 
their  reserve,  provided  that  not  less  than  two-fifths  of 
the  entire  reserve  should  consist  of  lawful  money  of  the 
United  States.  This  privilege  did  not  largely  diminish 
the  amount  of  gold  coin  and  greenbacks  which  the 
banks  were  required  continually  to  keep  on  hand,  as 
most  of  the  banks  held  a  large  amount  of  cash  reserve, 
in  addition  to  the  amount  required  by  law.  This  excess 
could  with  great  pi'ofit  be  invested  in  the  new  certifi- 
cates, and  they  could  be  used  to  advantage  for  clearing- 
house purposes,  and  the  banks  at  once  availed  them- 
selves of  this  privilege.  The  amount  authorized  by  this 
act  was  fifty  millions,  which  was  increased  to  seventy- 
five  millions  by  the  act  of  July  25, 1868.  These  certifi- 
cates were  payable  on  demand,  and  redeemable  at  the 
pleasure  of  the  Government ;  they  were  cliiefl,y  issued 
during  the  fiscal  j-ear  1868  and  1869,  and  for  the  most 
part  retired  in  the  fiscal  years  from  1869  to  1873 — 
$12,195,000  being  retired  during  the  latter  year. 

The  act  of  July  12, 1870,  authorized  the  issue  of  $54,- 
000,000  additional  bank  circulation,  and  section  two  of 
that  act  provided  that,  at  the  end  of  each  month  after 
the  passage  of  this  act,  the  Comptroller  of  the  Currency 
should  report  the  amount  of  such  circulating  notes  issued, 
whereupon  the  Secretary  of  the  Treasury  should  redeem 
and  cancel  a  like  amount  of  3  per  cent,  certificates;  and 


FIRST  GOLD  CERTIFICATES.  115 

in  order  to  retire  sncli  certificates  he  was  authorized  to 
give  notice  to  tlie  holders,  designating  the  number,  date 
and  amount,  that  such  certificates  shall  cease  to  bear 
interest  and  be  available  for  reserve,  from  and  after  the 
day  designated  in  the  notice. 

Thus  it  will  be  seen  that  the  compound  interest  notes 
were  issued  for  the  purpose  of  retiring  5  per  cent,  notes, 
the  3  per  cent,  certificates  for  the  retirement  of  the  com- 
pounds which  were  maturing,  and  the  act  of  July  12, 
1870,  was  passed  in  tui-n  for  the  retirement  of  the  3  per 
cents ;  and  the  different  acts  authorizing  these  issues  had 
the  effect  of  rapidly  accomplishing  these  results,  with  but 
little  inconvenience  either  to  the  banks  or  to  the  public. 

The  act  of  March  3, 1863,  authorized  the  issue  of  gold 
certificates,  of  one  and  two-year  notes,  and  of  compound 
interest  notes  ;  and  certificates  under  the  fifth  section  of 
that  act  were  used  for  clearing-house  pui-poses  soon  after 
the  passage  of  the  national  bank  act.  They  were  au- 
thorized to  be  issued  in  sums  of  not  less  than  $20,  cor- 
responding with  the  denomination  of  United  States 
notes.  The  coin  and  bullion  deposited  were  required  to 
be  retained  in  the  treasury  for  the  payment  of  the  same 
on  demand.  Certificates  representing  coin  in  the  treas- 
ury were  authorized  to  be  issued  in  payment  of  interest 
on  the  public  debt,  but  it  was  provided  that  the  amount  of 
certificates  issued  should  not,  at  any  one  time,  exceed  20 
per  centum  beyond  the  amount  of  coin  and  bullion  in 
the  treasury.  These  certificates  were  authorized  to  be 
received  at  par  in  payment  of  duties.  The  first  issue 
was  made  on  JSTovember  13,  1865.  On  June  30,  1875, 
there  were  outstanding  |2 1,796,300,  of  which  the  na- 
tional   banks   in    New   York   City   held    $12,642,180. 


lie  VNITED  STATES  NOTES. 

Tlieir  issue  was  discontinued  on  December  1,  1S78,  just 
pi-evious  to  tlie  resumption  of  specie  payments,  and  the 
amount  outstanding-  liad  decreased  on  June  30,  1870,  to 
815,413,700.  The  amount  outstanding  on  October  3, 
1883,  was  $4,007,440,  of  whicli  the  national  banks  held 
$4,504,300.  On  Octol)er  1,  1887,  tlie  amount  outstand- 
ing was  $2,354,600.  Most  of  these  certificates  were  is- 
sued for  clearing-house  purposes,  in  denominations  of 
$1,000,  $5,000,  and  $10,000. 

On  June  8,  1872,  an  act  was  passed  authorizing  the 
Secretary  of  the  Treasury  to  receive  United  States  notes 
on  deposit  without  interest  from  na.tional  bank  associa- 
tions, in  sums  not  less  than  $10,000,  and  issue  certifi- 
cates therefor,  of  denominations  not  less  than  $5,000. 
These  certificates  were  similar  to  the  3  per  cent,  cer- 
tificates just  referred  to,  except  that  they  bore  no  in- 
terest, and  were  largely  used  in  place  thereof  for  clear- 
ing-house purposes.  The  certificates  were  payable  on 
demand  in  United  States  notes  at  the  place  of  issue, 
and  they  were  authoi'ized  to  be  held  and  counted  by 
national  banks  as  part  of  their  legal  reserve,  and  to  be 
nsed  in  settlement  of  dearing-house  balances.  These 
certificates  were  not  properly  treasury  notes,  and  the 
highest  amount  issued  was  $64,780,000,  on  August  3, 
1875,  which  amount  was  ray)idly  ]-educed  after  the  I'e- 
sumption  of  specie  payments.  On  June  30,  1875,  there 
were  outstanding  $50,045,000,  of  which  the  national 
baidvs  held  $47,310,000.  On  June  30, 1876,  the  amount 
outstanding  was  $33,140,000,  of  which  the  banks  held 
$27,055.  The  amount  outstanding  on  August  1,  1887, 
was  $8,460,000,  of  which  the  banks  held  $7,810,000. 


FOUR  PER   CENT.    CERTIFICATES.  117 

Tlie  act  of  February  2G,  1879,  authorized  tlie  issue 
of  4  per  cent,  certificates,  of  the  denoinination  of  $10, 
M'hicli  were  convertible  at  m\y  time,  with  accrued  in- 
terest, into  the  4  per  cent,  bonds  autliorized  to  be  issued 
July  14,  1870.  This  act  was  passed  for  the  pnrpose  of 
facilitating  the  refunding  of  5  and  6  per  cent,  bonds 
then  falling  due  into  4  per  cents,  but  the  act  was  really 
nnnecessary,  for  about  the  time  the  certificates  began  to 
be  issued,  the  4  per  cent,  bonds  were  above  par  in  the 
market.  Long  lines  of  people  gathered  at  the  different 
Government  dcpositoi'ies  where  the  certificates  were 
offered,  and  the  amount  was  taken  as  fast  as  they  could 
be  furnished.  $40,012,750  were  disposed  of  at  par,  of 
which  $39,398,110  were  issued  during  the  fourth  quarter 
of  the  fiscal  year  1879,  and  the  amount  outstanding  on 
October  1,  1887,  was  $163,430. 

The  table  on  page  118  exhibits  the  amount  of  treasury 
notes  of  the  different  forms  issued  during  the  late  civil 
war,  outstanding  on  October  1,  1887,  interest  upon  all 
of  which  has  long  since  ceased. 

"  An  act  to  authorize  the  issue  of  United  States  notes, 
and  for  tlie  redemption  or  funding  thereof,  and  for  re- 
funding the  floating  debt  of  the  United  States,"  which 
was  signed  by  President  Lincoln  on  February  25, 
1862,  is  the  first  law  ever  placed  upon  the  statute  books 
making  treasury  notes,  or  anything  but  gold  and  silver 
coin,  a  tender  in  payment  of  debts.  Indeed,  it  may  be 
said  that  neither  the  Congress  of  the  United  States  nor 
the  Continental  Congress,  which  preceded  it,  issued  any 
form  of  legal  tender  treasury  notes.  The  Continental  Con- 
gress had  no  power  to  enact  such  a  law.  It  did,  however, 
pass  a  resolution,  on  Januai-y  4,  1777,  recommending  to 


lis 


UNITED  STATES  NOTES. 


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CONTINENTAL  MONEY  A   TENDER.  319 

the  legislatures  of  the  different  States  to  pass  laws  mak- 
ing the  bills  of  credit  issned  by  Congress  a  lawful  tender 
in  payment  of  public  and  private  debts,  and  a  refusal 
thereof  an  extinguishment  of  such  debts  ;  that  debts 
])ayable  in  sterling  money  be  discharged  in  continental 
dulhirs  at  the  rate  of  43.6  sterling  per  dollar  ;  and  that 
in  the  discharge  of  all  other  debts  and  contracts,  conti- 
nental dollars  shall  pass  at  the  rate  fixed  by  the  respect- 
ive States  for  the  value  of  Spanish  milled  dollars.  In 
accordance  with  the  recommendation  contained  in  these 
resolutions,  continental  paper  money  was  made  a  legal 
tender  in  Connecticut,  Massachusetts,  Rhode  Island,  and 
Kew  Jersey  in  1776,  and  in  Pennsylvania,  Delaware, 
Maryland,  and  Yirginia  in  1777. 

The  legal  tender  act  was  passed  auring  the  second  ses- 
sion of  the  32d  Congress,  which  met  December  2,  1S61. 
The  report  of  the  Secretary  of  the  Treasury  bears  date 
December  9tli.  The  third  instalment  of  fifty  millions, 
of  the  loan  of  150  millions  already  referred  to,  had  been 
negotiated  on  the  16th  of  November  previous,  with  the 
associated  banks.  The  Secretary  was  hopeful  that  the 
war  would  be  brought  to  an  auspicious  termination  be- 
fore midsnnnner,  but  at  the  same  time  submitted  esti- 
mates based  npon  its  continuance.  In  this  event,  it  was 
estimated  that  the  public  debt,  M'hich,  on  July  1,  1861, 
was  $90,867,828,  would  be  on  July  1,  1862,  517  millions, 
and  on  July  1st  of  the  following  yeai',  897  millions.  He 
recommended  the  issue  of  circulating  notes  in  place  of 
the  existing  bank-note  circulation,  which  depended  ^'■{.m 
the  laws  of  thirty-four  States,  and  the  character  of  somo 
sixteen  hundi'cd  ])i-ivate  corporations."' 

Two  plans  for  effecting  this  object  were  suggested; 


120  UNITED  STATES  NOTES. 

tlie  first  Avas  the  withdrawal  of  tlie  l)ank  circulation, 
ami  the  issue  of  United  States  notes  instead  tlieieof,  pay- 
able in  coin  on  demand ;  the  second  contemplated  the 
delivery  to  banks  of  notes  prepared  for  circulation  un- 
der national  dii-ection,  and  to  secure  pronipt  convertibil- 
ity into  coin  by  the  pledge  of  United  States  bonds,  and 
other  needful  regulations.  Both  of  these  plans  were 
discussed  at  considerable  length  in  the  report,  the  pref- 
erence of  the  Secretary  being  decidedly  in  favor  of  the 
issue  of  bank  notes.  The  avails  of  the  large  loan  made 
from  the  banks  were  not  allowed  to  remain  on  deposit, 
to  be  drawn  by  checks  as  the  necessities  of  the  Gov- 
ernment should  require,  but  Avere,  from  time  to  time, 
paid  into  the  treasury,  so  that  it  was  quite  difficult  for 
some  of  the  banks  to  meet  the  last  instalment.  The 
banks  were  in  danger  of  suspending  specie  payment  at 
the  time  of  the  meeting  of  Congress.  Suspension  finally 
took  place  on  December  28,  1861,  and  two  days  later, 
on  the  30th,  Mr.  Spaulding,  of  the  sub-committee  of  the 
Connnittee  of  Ways  and  Means,  introduced  the  legal 
tender  bill. 

A  national  bank  bill  had  been  prepared  previously,  and 
when  nearly  completed,  Mr.  Hooper,  of  Massachusetts, 
also  of  the  sub-committee,  incoi-porated  in  it  several  pi'o- 
visions  contained  in  a  I'ecent  free-banking  bill,  which  had 
passed  the  Legislature  of  his  own  State.  Two  hundred 
copies  of  this  bill,  which  was  hastily  prepared  late  in  the 
month  of  December,  were  printed  for  the  use  of  the 
Connnittee  of  Ways  and  Means,  and  a  copy  of  this  bill, 
which  was  the  basis  of  the  national  bank  act,  which  be- 
came a  law  about  a  year  afterward,  is  in  the  possession 
of  the  wiiter.     It  beinsr  evident  that  the  bank  bill  would 


LEGAL    TENDER  NOTES  DENOUNCED.  121 

encounter  considerable  opposition  from  tlie  friends  of 
banks  organized  under  State  laws,  and  that  great  delay 
would  necessarily  occur  from  the  consideration  of  an 
elaboi'ate  bank  bill  of  sixty  or  more  sections,  arranged 
for  the  organization  of  banks  in  the  different  States  of 
the  Union,  the  bill  was  laid  aside,  and  the  bill  authoriz- 
ing the  issue  of  legal  tender  notes  was  considered. 

An  informal  letter  was  read  to  the  Committee  from 
Attorney-General  Bates,  in  which  he  gave  it  as  his 
opinion  that  Congress  had  not  only  the  right  to  issue 
such  bills  of  credit,  but  also  to  make  them  a  legal 
tender.  Discussion  of  the  bill  continued  for  several 
days,  and  upon  a  vote  being  taken,  it  was  found  that 
the  Committee  w^as  equally  divided,  but  by  the  change 
of  a  vote  it  was  fiirally  repoj-ted  to  the  House  on  July  7, 
1862,  and  published  in  the  leading  New  York  news- 
papers. Only  two  dailj'  newspapers  favored  the  meas- 
ure, and  it  is  said  that  other  newspapers,  wdiich  were 
bitterly  liostile,  were  for  a  time  excluded  from  the 
privilege  of  the  mails.  The  leading  financial  magazine 
ridiculed  and  denounced  the  plans  of  the  Secretary  and 
of  Congress  in  its  monthly  issues,  and  at  one  time  de- 
clared that  "  the  financial  fabi-ic  of  the  Union  totters 
to  its  base  !  "  Delegates  f  i-om  ten  of  the  principal  banks 
in  the  three  leading  cities  appeai-ed  in  Washington  and 
opposed  the  bill.  The  bill  was  afterward  submitted  to 
the  Secretary  of  the  Treasury  by  the  Committee,  and, 
upon  its  return  with  his  suggestions,  was  reported  to  the 
House  on  January  22,  18G2,  with  the  title  above  given, 
as  a  substitute  for  the  previous  bill.  The  bill  passed  the 
House  on  February  6,  1862,  by  a  vote  of  93  to  59.    There 

were  no  democratic  votes  in  favor  of  the  bill,  and  among 
6 


122  UNITED  STATES  NOTES. 

the  nays  M'crc :  Morrill,  of  Yermont ;  Coiikling  and 
Pomeroy,  of  ^'e\v  York  ;  Porter,  of  Indiana;  Lovejoy, 
of  Illinois  ;  Thomas,  of  Massachnsetts  ;  Ilollins,  of  New 
Hampshire,  and  other  leading  Ttepublicans.  The  chief 
amendments  in  the  Senate  were:  requiring  payment  of 
interest  semi-annually  in  coin  on  bonds  and  seven-thirty 
notes ;  conferring  ou  the  Secretary  power  to  sell  0  per 
cent,  bonds  at  the  market  value  thereof  for  coin  ;  making 
the  bonds  redeemable  in  five  years  and  payable  in  twenty 
years  from  date  at  the  option  of  the  Government,  and 
authorizing  temporary  deposits  in  tlie  treasury  at  G  per 
cent. 

There  was  considerable  debate  in  both  Houses  upon  the 
question  of  the  right  of  the  Government  to  issue  demand 
notes,  and  the  arguments  were  not  unlike  those  which 
have  already  been  given  in  previous  debates  in  Congress. 
The  principal  discussion  was,  however,  upon  the  consti- 
tutional right  of  Congress  to  make  these  notes  a  legal 
tender. 

Secretary  Chase,  afterward  Chief  Justice,  in  a  letter 
to  the  Committee  of  Ways  and  Means  on  January  29, 
1862,  says:  "It  is  not  unknown  to  the  Committee  tliat 
I  have  felt,  nor  do  I  wish  to  conceal  that  I  now  feel,  a 
great  aversion  to  making  anything  but  coin  a  legal  ten- 
der in  payment  of  debts.  It  has  been  my  anxious  wish 
to  avoid  the  necessity  of  such  legislation.  It  is,  how- 
ever, at  present  impossible,  in  consequence  of  the  large 
expenditures  entailed  by  the  war,  and  the  suspension 'of 
the  banks,  to  procure  sutHcient  coin  for  disbursement ; 
and  it  has,  therefore,  become  indispensably  necessary 
that  we  should  resort  to  the  issue  of  United  States  notes. 
The  making  them  a  legal  tender  might,  however,  still 


LEGAL    TENDER  A   NECESSITY.  123 

be  avoided,  if  the  willingness  manifested  by  the  people 
generally,  by  railroad  companies,  and  by  many  of  the 
banking  institutions,  to  receive  and  pay  them  as  money 
in  all  transactions,  were  absolutely  or  practically  univer- 
sal ;  but,  unfortunately,  there  are  some  persons  and 
some  institutions  which  refuse  to  receive  and  pay  them, 
and  whose  action  tends,  not  merely  to  the  unnecessary 
depreciation  of  the  notes,  but  to  establish  discrimina- 
tions in  business  against  those  who,  in  this  matter,  give 
a  cordial  support  to  the  Government,  and  in  favor  of 
those  M'ho  do  not.  Such  discriminations  should,  if  pos- 
sible, be  prevented  ;  and  the  provision  making  the  notes 
a  legal  tender,  in  a  great  measure  at  least,  prevents  it, 
by  putting  all  citizens  in  this  respect  on  the  same  level, 
both  of  rights  and  c^iities. 

"  The  Committee,  doubtless,  feel  the  necessity  of  ac- 
companying this  measure  by  legislation  necessary  to  se- 
cure the  liighest  credit,  as  well  as  the  largest  currency 
of  these  notes.  This  security  can  be  found,  in  my  judg- 
ment, by  proper  provisions  for  funding  them  in  interest- 
bearing  bonds  ;  by  well-guarded  legislation  authorizing 
banking  associations  with  circulation  based  on  the  bonds 
in  which  the  notes  are  funded;  and  by  a  judicious  sys- 
tem of  adequate  taxation,  which  will  not  only  create  a 
demand  for  the  notes,  but— by  securing  the  pi-ompt  pay- 
ment of  interest — raise  and  sustain  the  credit  of  the 
bonds.  Such  legislation,  it  may  be  hoped,  will  divest 
the  legal  tender  clause  of  the  bill  of  injurious  tenden- 
cies, and  secure  the  earliest  possible  retuin  to  a  sound 
currency  of  coin  and  promptly  convertible  notes." 

From  the  introduction  of  the  bill  in  Congress  on  De- 
cember  30,  1861,  to  its  final  approval  on  February  25, 


124  UNITED  STATES  NOTES 

1862,  a  period  of  eight  weeks,  it  was  tlioroiiglilj  dis- 
cussed  l)otli  ill  Congress  and  tlironghout  the  conntiy. 
More  thuii  twenty  members  of  the  House  j^ai'ticipated 
in  the  debate.  Messrs.  Spaulding,  Hooper,  Alley,  Kel- 
logg, Campbell,  IHcknuin,  and  Stevens  were  the  most 
prominent  speakers  in  favor  of  the  measure.  Messrs. 
Pendleton,  Yallandigham,  Morrill,  Conkling,  Wright, 
and  Lovejoy  opposed  it.  Mr.  Spaulding  made  the 
speech  introducing  the  bill.  He  said  :  "  The  bill  before 
us  is  a  war  measure,  a  measure  of  necessity,  and  not  of 
choice,  presented  by  the  Committee  of  Ways  and  Means 
to  meet  the  most  pressing  demands  upon  the  treasury 
to  sustain  the  army  and  navy,  until  they  can  make  a 
vigorous  advance  upon  the  traitors,  and  crush  out  the 
rebellion.  These  are  extraordinary  times,  and  extraor- 
dinary measures  must  be  resorted  to  in  order  to  save 
our  Government,  and  preserve  our  nationality." 

In  the  course  of  the  discussion  the  following  extract 
from  a  letter  just  received  by  Mr.  Spaulding  from  the 
Secretary  of  the  Treasury  was  read  :  "  Immediate  action 
is  of  great  importance.  The  treasury  is  nearly  empty. 
I  have  been  obliged  to  draw  for  the  last  instalment  of 
the  November  loan.  So  soon  as  it  is  paid,  I  fear  the 
banks  generally  will  refuse  to  receive  the  United  States 
notes,  unless  made  a  legal  tender.  You  will  see  the 
necessity  of  urging  the  bill  through  without  more  delay." 

The  influences  which  seemed  to  render  it  necessary 
that  the  notes  authorized  to  be  issued  by  the  bill  should 
be  declared  a  legal  tender,  is  shown,  not  only  by  the  let- 
ters of  the  Secretary  but  by  the  debate  which  followed. 

Mr.  Hooper  said  :  "  The  unusual  exigencies  of  the 
country  require  that  we  should  look  for  other  and  deeper 


DEBATE  m  THE  HOUSE.  125 

Bonrces  of  revenue  than  any  to  which  we  have  hevetofore 
been  accnstonied.  We  are  contending  for  maintenance 
of  the  Government,  tlie  preservation  of  the  Union,  and 
for  the  enforcement  of  the  laws." 

Mr.  Alley  said  :  "  Beneficent  as  this  measure  is,  as 
one  of  relief,  nothing  could  induce  me  to  give  it  sanc- 
tion but  uncontrollable  necessity.  *  *  There  can  bo 
no  more  issues  than  the  real  necessities  of  the  Govern- 
ment require.  The  Government  cannot  make  issues, 
like  the  banks,  for  profit.  *  *  Its  issues  must  neces- 
sarily be  limited  to  its  absolnte  wants." 

On  the  same  point  Mr.  Kellogg  said  :  "  If  this  ques- 
tion came  up  in  ordinary  times,  I  am  frank  to  confess 
that  I  might,  perhaps,  have  had  some  doubt  of  its  con- 
stitutionality sufficient  to  induce  me  to  oppose  it.  I 
mean  by  that  only  to  say  that  in  time  of  peace,  when  the 
integrity  of  the  Government  is  not  threatened,  I  would 
be  more  careful  and  cautions ;  and  if  I  doubted  the  con- 
stitutionality of  tlie  measure  I  would  not  vote  for  it. 
But,  sir,  in  this  onr  extremity,  while  we  are  struggling 
to  perpetuate  our  Government,  I  am  willing  to  go  to  the 
very  verge  of  the  Constitution.  I  treat  this,  Mr.  Chair- 
man, as  emphatically  and  clearly  a  war  measure." 

Mr.  Blake  argued  that  it  was  constitutional  to  issue  A 
treasury  notes  and  make  them  a  legal  tender.  He  in-  \ 
sisted  that  it  was  a  necessary  and  proper  means  of  carry- 
ing into  effect  the  war  powers — to  raise  and  support 
armies,  and  to  provide  and  maintain  a  navy.  We  are 
now  in  the  midst  of  a  great  national  exigency,  and  one, 
too,  that  we  must  provide  for  ;  and  one  that  in  the  appli- 
cation of  the  means  there  must  of  necessity  be  great  lati- 
tude of  discretion. 


,12G  UNITED  STATES  NOTES. 

Mr.  Ciimpbcll  i-oinai-kcd  :  "  Tlio  bill  now  boforo  flic 
Committee  is  necessary  to  sustain  the  credit  of  the  conn- 
trv,  and  to  carry  on  the  war.  It  is  with  reluctance  tliat 
I  have  come  to  this  conclusion.  I  do  not  like  the  neces- 
sity which  exists  for  the  legal  tender  clause  ;  still  less 
do  I  like  to  place  the  issiues  of  the  Government  in  the 
liands  of  the  brokers  and  money-lenders  of  the  conntiy. 
Depreciated  now,  let  the  legal  tender  clanse  fail,  and 
mark  the  result  to-moi'row.  The  treasmy  notes  will  fall 
from  4  per  cent,  to  15  and  25  below  par,  and  the  Gov- 
ernment will  have  to  pay  that  percentage  additional  for 
every  article  they  pnrchase." 

Mr.  Hickman,  of  Pennsylvania,  on  the  same  side, 
said  :  "  I  am  disposed  to  waive  the  question  of  propriety 
or  expediency,  and  to  vote  for  it  as  a  necessity." 

,Mr.  Stevens,  who  closed  the  debate,  said  :  "  This  bill 
is  a  measure  of  necessity,  not  of  choice.  No  one  would 
willingly  issne  paper  currency  not  redeemable  on  de- 
mand, and  make  it  a  legal  tender.  It  is  never  desirable 
to  depart  from  the  circulating  medium  which,  b}'  the 
common  consent  of  civilized  nations,  forms  the  standard 
value.  But  it  is  not  a  fearful  measure,  and  when  ren- 
dered necessarj^  by  exigencies  it  ought  to  produce  no 
alarm." 

He  argued  in  favor  of  the  constitutionality  of  the 
legal  tender  clause,  and  that  it  was  a  necessary  and 
proper  measure  at  this  time.  "  In  short,  whenever  any 
law  is  necessary  and  proper  to  carry  into  execution  any 
delegated  power,  such  law  is  valid.  That  necessity  need 
not  be  absolute,  inevitable,  and  overwhelming — if  it  be 
useful,  expedient,  profitable,  the  necessity  is  within  the 
constitutional  meaning.     Whether  such  necessity  exists 


SPEECH  OF  TIIADDEU8  STEVENS.  127 

is  solely  for  the  decision  of  Congress.  Their  jnclgnierit 
is  absolute  and  conclusive.  If  Congress  should  decide 
this  measure  to  bo  necessary  to  a  granted  power,  no  de^ 
partment  of  the  Govei'nnient  can  rejudge  it.  The  Su- 
preme Court  might  think  the  judgment  of  Congress 
erroneous,  but  they  could  not  review  it.  ■■•■  *  Our 
proposition  is  to  issue  United  States  notes,  secured  at  the 
end  of  twenty  years  to  be  paid  in  coin,  and  the  interest 
I'aised  by  taxation  semi-annually ;  such  notes  to  be 
money,  and  of  uniform  value  throughout  the  Union. 
I  look  upon  the  immediate  passage  of  the  bill  as  es- 
sential to  the  very  existence  of  the  Government.  Reject 
it,  and  the  financial  credit,  not  only  of  the  Government, 
but  of  all  the  great  interests  of  the  country,  will  be 
prostrated.  Mr.  Chairman,  let  me  say  in  conclusion, 
that  unless  this  bill  is  to  pass  with  the  legal  tender 
clause  in  it,  it  is  not  desirable  to  its  friends,  or  to  the 
Administration,  that  it  should  pass  at  all;  and  those 
who  think  as  I  do  will  have  to  vote  against  it,  if  it 
should  be  thus  mutilated  and  emasculated.  If  it  is  to 
be  defeated,  I  should  l)e  glad  if  we  had  the  power  which 
they  have  hi  the  British  Parliament — to  resign  our 
places  on  the  C^ommittee  of  Ways  and  Means,  and  leave 
it  to  those  who  oppose  this  bill  to  mature  some  other 
measure.  So  far  as  I  am  concerned,  I  shall  be  modest 
enough  not  to  attempt  any  other  scheme.  The  Com- 
mittee of  Ways  and  Means  have  labored  in  the  prepara- 
tion of  this  measure  anxiously,  and  to  the  best  of  their 
poor  abilities.  We  are  not  infallible.  We  do  not  come 
near  it.  I  am  but  poorly  qualified  for  anything  of  this 
kind.  But  we  have  given  it  our  most  anxious  consider- 
ation, and  have  consulted  those  whom  we  believed  to 


128         UNITED  STATES  NOTES 

be  the  Lest  qualified  to  advise  ns.  We  have  FOiight  to 
harmonize  coiillictiiig  views  in  the  substitute  Mhich  the 
majority  of  the  Committee  liave  prepared,  and  we  hope 
it  will  pass.  We  believe  that  the  credit  of  the  country 
will  be  sustained  by  it,  that  under  it  all  classes  will  be 
paid  in  money  which  all  classes  can  use,  and  that  it 
will  confer  no  advantage  on  the  capitalist  over  the  poor 
laboring  man." 

The  following  extracts  from  the  speeches  of  those  op- 
posed to  the  bill  will  indicate  the  drift  of  their  argu- 
ments. Mr.  Pendleton  said :  "  These  notes  are  to  be 
made  lawful  money,  and  a  legal  tender  in  discharge  of 
all  pecuniary  obligations,  either  by  the  Government  or 
individuals,  a  character  which  has  never  been  given  to 
any  note  of  the  United  States,  or  any  note  of  the  Bank 
of  the  United  States,  by  any  law  ever  passed.  Kot  only, 
sir,  was  snch  a  law  never  passed,  but  such  a  law  M'as 
never  voted  on,  never  proposed,  never  introduced,  never 
recommended  by  any  department  of  the  Government ; 
the  measure  was  never  seriously  entertained  in  debate 
in  either  branch  of  Congress."  He  contended  that  the 
bill,  if  passed,  would  impair  the  obligation  of  past  as 
well  as  of  future  contracts,  and  that  it  would  make  it  il- 
legal to  make  a  contract  for  dealing  in  gold  or  silver 
coin,  for  the  reason  that  these  legal  tender  notes  might 
be  tendered  in  payment  of  coin  contracts ;  and  added : 
"When  I  come  to  examine  the  powers  of  Congress  ac- 
cording to  the  principles  of  interpretation  to  which  I  ad- 
here, I  look  to  the  grants  of  the  Constitution.  I  find 
no  grant  of  this  power  in  direct  terms,  or,  as  I  think,  by 
fail"  implication.  It  is  not  an  accidental  omission  ;  it  is 
not  an  omission  through  inadvertency,     It  was  inten- 


DEBATE  IN  THE  HOUSE:  129 

tionally  left  out  of  the  Constitution,  becanse  it  was  de- 
signed that  the  power  should  not  reside  in  the  Federal 
Government." 

Mr,  Yallandigham  denied  the  right  of  the  Federal 
Government  to  provide  a  paper  currency,  intended 
primarily  to  circulate  as  monej',  and  meet  the  demands 
of  business  and  commercial  transactions,  and  to  the  ex- 
clusion of  all  other  paper.  It  is  not  the  intent  or  object 
of  the  substitute  to  furnish  such  a  currency  for  the  coun- 
try, lie  said :  "The  ship  of  State  is  upon  the  Rocks. 
I  was  not  the  helmsman  who  drove  her  there  ;  nor  had 
I  part  or  lot  in  directing  her  course." 

Mr.  Morrill  protested  "  against  making  anything  a  legal 
tender  but  gold  and  silver,  as  calculated  to  undermine  all 
confidence  in  the  Republic,  whose  reputation  should  be 
dearer  to  statesmen,  as  well  as  to  soldiers,  than  life  itself." 

Mr.  Conkling  assigned  his  reasons  for  voting  against 
the  attempt  to  make  paper  a  legal  tender  as  follows : 
"  The  proposition  is  a  new  one.  No  precedent  can  be 
urged  in  its  favor :  no  suo-gestion  of  the  existence  of 
such  a  power  can  be  found  in  the  legislative  histoiy  of 
the  country  ;  and  I  submit  to  my  colleague,  as  a  lawyer, 
the  proposition  that  this  amounts  to  affirmative  author- 
ity of  the  highest  kind  against  it.  Had  such  a  power 
lurked  in  the  Constitution,  as  construed  by  those  who 
ordained  and  administered  it,  we  should  find  it  so  re- 
corded. The  occasion  for  resorting  to  it,  or  at  least  re- 
ferring to  it,  has,  we  know,  repeatedly  arisen  ;  and  had 
such  a  power  existed,  it  would  have  been  recognized  and 
acted  on.  It  is  hardly  too  much  to  say,  therefore,  that 
the  uniform  and  universal  judgment  of  statesmen,  jur- 
ists, and  lawyers  has  denied  the  constitutional  right  of 
6* 


130  UNITED  STATES  NOTES 

Congress  to  make  paper  a  legal  tender  for  debts  to  any 
extent  whatevei-.  But  more  is  claimed  here  than  the 
right  to  create  a  legal  tender  heretofore  nnknovvn.  The 
provision  is  not  confined  to  transactions  mfuture,h\\i  is 
retroactive  in  its  scope.  It  reaches  hack  and  strikes  at 
every  existing  pecuniary  obligation."  And  he  added  : 
"  I  believe  all  the  money  needed  can  be  provided  in  sea- 
son by  means  of  unquestionable  legality  and  safety. 
The  substitute  I  have  offered  will,  I  believe,  without 
essential  alteration,  effect  that  result." 

Mr.  Wright  thought  that  "  the  people  had'  means 
enough  in  their  possession,  and  he  was  willing  to  go  for 
taxation  to  the  uttermost  limit;  but  the  time  had  not  yet 
arrived  when  we  should  resort  to  such  an  extreme  meas" 
ure  as  to  make  these  notes  a  legal  tender." 

Mr.  Lovejoy  held  "  that  no  respectable  argument  could 
be  made  in  vindication  of  the  constitutionalitj^  of  this 
bill.  He  Avould  admit  the  plea  of  necessity  if  he  be- 
lieved it ;  and  he  thought  it  more  manly  to  confess  it, 
as  Jefferson  did,  than  to  attempt  to  torture  the  Consti- 
tution into  the  support  of  a  measure  which  everybody 
must  see  to  be  unconstitutional." 

The  bill  passed  the  House  on  February  6th,  b}^  a  vote 
of  93  to  59.  It  was  sent  to  the  Senate  on  February 
Ttli.  Mr.  Fessenden,  Chairman  of  the  Finance  Com- 
mittee, obtained  unanimous  consent  to  consider  the  sub- 
ject forthwith,  and  read  a  letter  from  the  Secretary  of 
the  Treasm-y  of  which  the  following  is  an  extract  ; 
"  The  condition  of  the  treasury  requires  immediate  legis- 
lative provision." 

Mr.  Fessenden  opened  the  debate.  He  proposed  to 
state  brieflv  the  aro-uments  on  both  sides  without  either 


SENATOR  FESSENDEN'S  SPEECH.  131 

favoring  or  opposing  the  measnre.  He  said  :  "  The 
ground  upon  which  this  clanse  making  these  notes  a 
legal  tender  is  put,  I  have  already  stated.  It  is  put 
upon  the  ground  of  absolute,  overwhelming  necessity  ; 
that  the  Government  has  now  arrived  at  that  point 
M'here  it  must  have  funds,  and  those  funds  are  not  to  be 
obtained  from  ordmary  sources,  or  from  any  of  the  ex- 
pedients to  which  we  have  heretofore  had  recourse,  and 
therefore,  this  new,  anomalous,  and  remarkable  provi- 
sion must  be  resorted  to  in  order  to  enable  the  Govern- 
ment to  pay  off  the  debt  that  it  now  owes,  and  afford 
circulation  which  will  be  available  for  other  purposes. 
The  question  then  is,  does  the  necessity  exist  ?  "  He 
did  not  hesitate  to  say  that  he  "  would  advocate  the  use 
of  the  strong  arm  of  the  Government  to  any  extent  in 
ordei'  to  accomplish  the  purpose  in  which  we  are  engaged. 
He  would  take  the  money  of  any  citizen  against  his  will 
to  sustain  the  Government,  if  nothing  else  was  left,  and 
bid  him  wait  until  the  Government  could  pay  him.  It 
is  a  contribution  which  every  man  is  bound  to  make  under 
the  circumstances.  We  can  take  all  the  property  of  any 
citizen.  That  is  what  is  called  a  forced  contribution. 
*  *  The  question  after  all  returns  :  Is  this  measure 
absolutely  indispensable  to  procure  means  ?  If  so,  as  I 
said  before,  necessity  knows  no  law.  Say  what  you 
will,  nobody  can  deny  that  it  is  bad  faith.  If  it  be 
necessary  for  the  salvation  of  the  Government,  all  con- 
siderations of  this  kind  must  yield  ;  Init  to  make  the 
best  of  it,  it  is  bad  faith,  and  encourages  bad  morality, 
both  in  public  and  private.  Going  to  the  extent  that  it 
does,  to  say  that  notes  thus  issued  shall  be  receivable  in 
payment  of  all  private  obligations,  however  contracted, 


132  UNITED  STATES  NOTES. 

is  in  its  very  essence  a  wrong,  for  it  compels  one  man 
to  take  from  his  neighbor,  in  payment  of  a  debt,  that 
which  he  would  not  otherwise  receive  or  be  obliged  to 
receive,  and  what  is  probably  not  full  payment." 

Ml'.  Collamer  made  an  elaborate  speech  against  the 
legal-tender  clause  in  the  bill.  He  aigned  that  it  was 
unconstitutional,  and  that  even  if  it  was  a  necessity,  he 
could  not  vote  for  the  measure.  His  honest  opinion  M'as 
that  the  Constitution  never  intended  to  invest  Congress 
Mith  any  such  power.  He  referred  to  the  debates  in 
the  convention  that  formed  the  Constitution,  to  show 
that  "  the  men  of  that  period  always  entertained  the 
opinion  that  the  United  States  could  have  nothing  else 
a  tender  but  coin.  While  they  lived  there  never  was 
such  a  thing  thought  of  as  attempting  to  make  the  evi- 
dences of  the  debt  of  the  Government  a  legal  tender, 
let  their  form  be  what  they  might."  He  argued  that 
there  was  an  express  power  "to  borrow  money  on  the 
credit  of  the  United  States.  That  where  there  is  an 
exj^ress  power  to  do  a  thing,  there  can  be  no  implied 
power  to  do  the  same  thing.  There  were  two  modes  of 
replenishing  the  trcasuiy.  One  was  by  taxation,  and 
the  other  to  borrow  money.  To  borrow  money  thei'e 
nnist  be  a  lender  and  a  boi-rower;  and  both  should  act 
voluntarily,  and  not  compel  the  lender  to  pai't  with  his 
money  without  an  inducement.  The  operation  of  this 
bill  was  not  anything  like  as  honorable  or  honest  as  a 
forced  loan." 

Mr.  Sherman  spoke  in  favor  of  the  legal-tender  clause, 
and  in  regard  to  its  necessity  said  :  "  Every  organ  of 
financial  opinion  " — referring  to  the  action  of  the  Cham- 
bers of  Commerce  in  the  principal  cities — "  if  that  is  a 


DEBATE  IN  THE  SENATE.  133 

correct  expression — in  this  country  agrees  that  there  is 
such  a  necessit}',  in  case  we  authorize  the  issue  of  de- 
mand notes.  "  *  Our  arguments  must  he  submitted 
finally  to  the  arbitration  of  the  courts  of  the  United 
States.  When  I  feel  so  strongly  the  necessitj'  of  this 
measure,  I  am  constrained  to  assume  the  power,  and  re- 
fer our  authority  to  exercise  it  to  the  courts.  I  have 
shown,  in  reply  to  the  argument  of  the  Senator  from 
Maine,  that  we  must  no  longer  hesitate  as  to  the  neces- 
sity of  tliis  measure.  That  necessity  does  exist,  and  now 
presses  upon  us."  He  thought  himself  required  "  to 
vote  for  all  laws  necessary  and  proper  for  executing 
these  high  powers,  and  to  accomplish  that  purpose. 
This  is  not  the  time  when  I  would  limit  these  powers. 
Rather  than  yield  to  revolutionary  force,  I  would  use  re- 
volutionary force." 

Mr.  Ilowe  said :  "  Congress  is  also  clothed  with  power 
'  to  make  all  laws  which  shall  be  necessary  and  proper 
for  carrying  into  execution  the  foregoing  powers,  and 
all  other  powers  vested  by  this  Constitution  in  the  Gov* 
ernmeut  of  the  United  States.'  Those  who  denj^  the 
constitutional  authority  to  pass  this  bill  must  deny  its 
necessity  or  its  propi'iety.  Those  who  deny  its  necessity 
or  its  propriety  ought  to  show  us  some  plan  for  avoid- 
ing it,  some  measure  adequate  to  the  emergency,  and 
more  proper  than  the  one  proposed  by  this  bill.  Two 
months  have  elapsed"  since  the  policy  of  this  bill  has 
been  discussed,  and  no  one  of  its  opponents  has  yet  pro- 
duced a  substitute.  The  total  neglect  to  offer  a  substi- 
tute \s,j>rima facie  evidence  of  the  necessity  for  this." 

Mr.  Bayard  said:  ""No  one  can  deny  the  fact  that  in 
contracts   between  man  and  man,  and  in   government 


134  UNITED  STATES  NOTES. 

contracts  to  pay  money,  the  obligation  is  to  pay  intrin- 
sic value.  If  you  violate  that  by  tin's  bill,  which  you 
certainly  do,  how  can  you  expect  that  the  faith  of  the 
community  will  be  given  to  the  law  which  yoii  now  pass, 
in  which  you  say  that  you  will  pay  hereafter  the  interest 
on  your  debt  in  coin?  Why  should  they  give  credit  to 
that  declaration  ?  If  you  can  violate  the  Constitution  of 
the  United  States  in  the  face  of  your  oaths,  in  the  face 
of  its  palpable  provision,  what  security  do  you  offer  to 
the  lender  of  money  ?  " 

Mr.  Sumner  argued,  in  the  present  existing  state  of  the 
country,  for  the  constitutionality  and  expediency  of  the 
legal-tender  clause.  He  quoted  from  Mr.  Justice  Story 
"  that  all  these  prohibitory  clauses  as  to  coining  money, 
emitting  bills  of  credit,  and  tendering  anything  but  gold 
and  silver  in  payment  of  debts,  are  founded  upon  the 
same  general  considerations.  The  policy  is  to  provide 
a  fixed  and  uniform  rule  throughout  the  United  States, 
by  which  commercial  and  other  dealings  of  the  citizens, 
'as  well  as  the  moneyed  transactions  of  the  Government, 
might  be  adjusted"  (2  Story's  Com.,  Sec.  1372). 

"  If  this  view  be  correct,  then  no  inference  adverse  to 
the  powers  of  the  National  Government  can  be  drawn 
from  these  prohibitory  clauses ;  for  whatever  may  be 
the  policy  of  the  Xational  Government,  it  will  be  a 
fixed  and  uniform  rule  throughout  the  United  States." 
"  Surely,  we  must  all  be  against  paper  money,  we  must 
all  insist  upon  maintaining  the  integrity  of  the  Govern- 
ment ;  and  we  must  all  set  our  faces  against  any  propo- 
sition like  the  present,  except  as  a  temporary  expedient, 
rendered  imperative  by  the  exigency  of  the  hour." 

"  Others  may  doubt  if  the  exigency  is  sufficiently  ira- 


THE  VOTE  IN  THE  SENATE.  135 

perative  ;  but  the  Secretary  of  the  Treasury,  whose  dnty 
it  is  to  understand  the  occasion,  does  not  doubt.  In  his 
opinion  the  war  requires  this  sacrifice.  AVhatever  may 
be  the  national  resources,  they  are  not  now  within  reach, 
except  by  summary  process.  Kehictantly,  painfull}',  I 
consent  that  the  process  should  issue.  Aud  yet  I  camiot 
give  such  a  vote  without  Avai'uing  the  Government 
against  the  dangers  from  such  an  experiment.  The 
medicine  of  the  Constitution  must  not  become  its  daily 
bread." 

The  motion  of  Mr.  Collamer,  on  February  13,  to 
strike  out  the  legal  tender  clause,  was  defeated,  17  yeas 
to  22  nays.  Anthony,  of  Rhode  Island,  Collamer  and 
Foot,  of  Vermont,  Fessenden,  of  Maine,  King,  of  New 
York,  Cowan,  of  Pennsylvania,  Foster,  of  Connecticut, 
and  Willey,  of  Virginia,  of  the  Republicans,  voted  yea. 
Four  Democrats  only — Davis,  of  Kentucky,  McDougall, 
of  California,  Rice,  of  Minnesota,  and  Wilson,  of  Mis- 
souri— voted  nay.  The  bill  passed  by  a  vote  of  30  to  7, 
three  Republicans — Collamer,  Cowan,  and  King — and 
four  Democrats — Kennedy,  Pearce.  PoM^ell,  and  Sauls- 
bury — voting  nay. 

The  Senate  amendment  to  pay  interest  upon  the  five- 
twenty  bonds  in  coin  was  adopted  by  the  House,  by  a 
vote  of  88  to  56.  The  amendment  authorizing  the 
Secretary  to  sell  the  bonds  at  the  market  value  was  also 
adopted — ayes,  72  ;  nays,  6G. 

On  February  20th  the  amendments  were  returned 
to  the  Senate  with  the  concurrence  of  the  House  in 
part  of  them,  and  non- concurrence  in  others,  and  with 
some  amendments  to  the  Senate  amendments ;  after 
which   a   conference   connnittee — Senators   Fessenden, 


136  UNITED  STATES  NOTES 

Sliennan,  and  Carlisle,  and  Representatives  Stevens, 
llorton,  and  Sedgwick — was  appointed,  wliicli  eonnnittee 
liad  a  lony;  consultation  extendini!;  thi-onjjrli  two  or  tlii'ee 
days.  The  report  of  the  conference  committee  was  agreed 
to  on  the  24th  in  the  House  by  yeas  97,  nays  22,  and  in 
the  Senate  on  the  25th  without  a  division,  and  on  the 
same  day  the  bill  was  approved  by  the  President.  It 
authorized  the  issue  of  150  millions  of  United  States 
notes,  not  bearing  interest,  payable  to  bearer  at  the  Treas- 
ury of  the  United  States,  and  of  denominations  of  not 
less  than  $5,  fifty  millions  of  which  were  to  be  in  lieu  of 
the  demand  treasury  notes  which  had  been  previously 
issued  ;  they  were  similar  in  form  to  those  notes,  but  they 
were  not  receivable  in  payment  of  duties  on  imports,  and 
M'cre  not  payable  by  the  Government  for  interest  upon 
its  obligations,  which  were  payable  in  coin  ;  they  were  to 
be  a  legal  tender  in  payment  of  all  other  debts,  public 
and  private,  within  the  United  States.  They  differed 
from  the  first  notes  issued  also,  and  in  this  respect — that 
all  holders  of  legal-tender  notes  were  authorized  to  de- 
posit any  sum  not  less  than  $50,  or  any  multiple  of  $50, 
with  the  Treasurer,  or  either  of  the  Assistant  Treasurers, 
and  receive  duplicate  certificates,  upon  which  were  to  be 
issued  to  the  holder  an  equal  amount  of  bonds  of  the 
United  States  bearing  interest  at  the  rate  of  6  per  cen- 
tum per  annum,  payable  semi-annually,  and  redeemable 
at  the  pleasure  of  the  United  States  after  five  yeai-s, 
and  payable  twenty  years  from  the  date  thereof.  The 
second  section  of  the  same  act  authorized  the  issue  of 
500  millions  of  five-twenty  bonds  into  which  the  treas- 
ury notes  were  to  be  funded,  in  accordance  with  the 
previous  section  and  as  stated  in  the  title  of  the  bill. 


FIRST  LEGAL   TENDERS  ISSUED  IN  1862.         137 

The  first  notes  issued  were  of  the  (late  of  Marcli  10, 
1862,  and  there  was  printed  upon  the  back  tlie  following 
words  :  "This  note  is  a  legal  tender  for  all  debts,  public 
and  private,  except  duties  on  imports  and  interest  on  the 
public  debt,  and  is  exchangeable  for  United  States  6 
per  cent,  bonds  redeemable  at  the  pleasure  of  the  United 
States  after  five  years."  The  ten-dollar  note  was  in  its 
general  appearance  almost  precisely  like  the  demand 
note  of  that  denomination  ;  the  principal  difference  being 
that  the  words  "  on  demand  "  were  omitted,  and  the  sig- 
natures of  the  Register  and  Treasurer  were  engraved. 

On  June  7,  1862,  the  Secretary  addressed  letters  to 
the  chairmen  of  the  Committee  of  Waj^s  and  Means  of 
the  House  and  the  Finance  Committee  of  the  Senate, 
recommending  a  further  issue  of  150  millions  of  dollars 
of  legal-tender  notes.  He  said  that  nearly  the  whole 
issue  of  sixty  millions  in  demand  notes  was  held  by 
bankers  and  by  capitalists,  and  was  at  a  premium  of  from 
f  to  1^  per  cent,  on  account  of  its  availability  for  the 
payment  of  duties ;  so  that  there  was  really  only  about 
ninety  millions  of  United  States  notes  in  circulation. 
He  said  that  the  United  States  notes  are  maintained  at 
near  par  in  gold  by  the  provision  for  their  conversion 
into  bonds  bearing  6  per  cent,  interest  payable  in  coin, 
and  that  resumption  would  be  more  easily  effected  "  if 
the  cur]-ency — small  as  well  as  large — were  of  United 
States  notes,  than  if  the  channels  of  circulation  be  left 
to  be  filled  up  by  the  emissions  of  non-specie  paying 
corporations,  solvent  and  insolvent."  With  tliese  letters 
he  transmitted  bills  for  the  consideration  of  these  com- 
mittees. The  immediate  necessities  of  the  Government 
admitted  of  but  little  delay,  and  the  bill,  substantially 


13S  UNITED  STATES  NOTES. 

as  reconmicnded  by  the  Secretary,  passed  both  Houses^ 
and  was  signed  by  the  Pjesideiit  on  June  11,  18G2. 
The  bill  authorized  the  issue  of  150  millions  of  legai- 
tendei'  notes,  thirty -five  millions  of  which  were  to  be  in 
denominations  less  than  $5.  The  subsequent  act  of 
March  3,  1863,  authorized  the  issue  of  an  additional 
150  millions,  making  the  ao^o-reo-ate  authorized  issue  of 
legal-tender  notes  450  millions  of  dollars.  This  act  was 
similar  to  the  previous  legal-tender  acts,  so  far  as  the 
issue  of  treasury  notes  was  concerned,  except  that  it 
provided  "  that  the  holders  of  United  States  notes  issued 
under  former  acts  shall  present  the  same  for  the  purpose 
of  exchanging  them  for  bonds  as  therein  provided  on  or 
before  July  1, 1863,  and  thereupon  the  right  to  exchange 
the  same  shall  cease  and  determine." 

After  the  passage  of  the  act  of  March  3,  1803,  the 
Secretary  decided  to  commence  the  negotiation  of  5  per 
cent,  ten-forty  bonds,  and  gave  notice  that  he  should  de- 
cline to  allow  the  holders  of  legal  tenders  to  fund  such 
notes  in  bonds  bearing  a  greater  rate  of  interest  than 
6  per  cent,  after  July  1, 1863.  The  negotiation  of  the  5 
per  cents  was  not  successful  at  that  time,  and  that  por- 
tion of  the  act  of  March  3d  which  repealed  the  right  to 
fund  legal  tenders  into  five-twenties,  as  printed  upon 
the  back  of  the  notes,  was  not  only  a  violation  of  the 
contract  with  the  liolder,  but  also  a  serious  financial 
mistake.  It  had  the  effect  to  materially  reduce  the 
value  of  the  treasury  notes  in  the  market,  prevented  the 
further  funding  of  treasury  notes  after  July  1st,  and 
nndoubtedly  postponed  for  many  months  the  date  for 
the  resnmption  of  specie  payment. 

The  liighest  amount  of  legal-tender  notes  outstanding 


REPORT  OF  SECRETARY  McCULLOCII,  1865.      139 

fit  any  time  was  on  January  3,  1864,  when  the  amount 
reached  $449,338,902.  The  second  section  of  the  act  of 
June  30,  1864,  provided  tliat  "the  total  amount  of 
United  States  notes  issued  or  to  be  issued  shall  not  ex- 
ceed 400  millions,  and  such  additional  sum,  not  exceed- 
ing fifty  millions,  as  may  be  temporarily  required  for 
the  redemption  of  temporary  loans."  The  following 
table  shows  by  denominations  the  amount  of  legal-ten- 
der notes  outstanding  on  January  1,  1885  : 


Ones $26,523,143  80 

Twos 26,840,217  20 

rives  77,538,815  GO 

Tens 67,860,366  00 

Twenties 55,513,489  00 

Fifties  22,703,695  00 

One  hundreds  33,263,790  00 

Five  hundreds 15,015,000  00 

One  thousands 22,272,500  00 

Five  thousands   100,000  00 

Ten  thousands 50,000  00 

Less  destroyed  in  the  Chicago  fire 1,000,000  00 

Total $346,681,016  00 


Secretary  McCulloch,  in  his  report  for  1865,  expressed 
the  opinion  that  the  legal-tender  acts  were  war  meas- 
ures, and  ought  not  to  remain  in  force  one  day  longer 
than  should  be  necessary  to  enable  the  people  to  prepare 
for  a  return  to  the  gold  standard.  The  House  of  Eepre- 
sentatives  during  the  same  month  passed  a  resolution,  by 
a  vote  of  144  yeas  to  6  nays,  "  cordially  concurring  in  the 
views  of  the  Secretary  of  the  Treasury  in  relation  to  the 
necessity  of  the  contraction  of  the  currency,  with  a  view 


HO  UNITED   STATES   NOTES. 

to  fts  early  a  resumption  of  specie  payment  as  the  Lnsi- 
iiess  interests  of  the  country  will  permit."  In  order  to 
carry  into  effect  this  resolution,  Congress,  by  an  act  ap- 
proved March  12,  1S6G,  authorized  the  retiring  and  can- 
cellation of  not  more  than  ten  millions  of  legal-tender 
notes  within  six  months  from  the  passage  of  the  act, 
and  thereafter  not  more  than  four  millions  in  any  one 
month.  Under  this  act  the  amount  outstanding  was  so 
far  reduced  that  on  December  31,  1S67,  the  amount  was 
356  millions.  On  February  4,  1868,  the  further  reduc- 
tion of  the  vohnne  of  such  notes  was  prohibited,  leaving 
the  last-named  amount  outstandii'.g  nntil  October  1, 
1872.  Between  March  IT,  1873,  and  January  15,  1874, 
nnder  Secretary  Richardson,  tlie  amount  was  increased 
to  ?;3S2,971>,815,  and  on  June  20,  1874,  the  maximum 
amount  was  fixed  at  $382,000,000 ;  section  six  of  the 
act  of  that  date  providing  that  "  the  amount  of  United 
States  notes  outstanding  and  to  be  used  as  a  part  of  the 
circulating  medium  shall  not  exceed  the  sum  of  382  mil- 
lions, which  said  sum  shall  appear  in  each  monthly  state- 
ment of  the  public  debt,  and  no  part  thereof  shall  be 
held  or  used  as  a  reserve." 

Section  three  of  the  act  of  January  14,  1875,  author- 
ized an  increase  of  the  circulation  of  national  banks,  in 
accordance  with  existing  law,  without  respect  to  the 
limit  previously  existing,  but  requiied  the  Secretary  of  the 
Treasury  to  retire  legal-tender  notes  to  an  amount  equal 
to  eighty  per  cent,  of  the  national-bank  notes  thereafter 
issued,  until  the  amount  of  such  legal-tender  notes  out- 
standing should  be  300  millions,  and  no  more.  Under 
the  operation  of  this  act  835,318,984  of  legal-tender 
notes  were  retired,  leaving  the  amount  in  circulation  on 


SPECIE  PAYMENTS  RESUMED,   1879.  141 

May  31,  1S78,  the  date  of  the  repeal  of  the  act,  $34G,- 
()S1,016,  M'hich  is  the  amount  now  outstanding. 

Tlie  table  on  page  142  exhibits  the  amount  of  the 
varions  issues  of  Treasm-y  notes  outstanding  on  July  1st, 
of  each  year  from  1862  to  1884,  and  on  October  1, 
1887;  together  with  the  amount  of  national-bank  notes 
and  the  value  of  the  legal-tender  Treasury  note  as  com- 
pared with  coin  for  the  same  dates. 

The  act  of  January  14,  1875,  required  the  Secretary 
of  the  Treasury,  on  and  after  Januaiy  1,  1879,  to  re- 
deem in  coin  the  legal-tender  notes  on  their  presentation 
at  the  office  of  the  Assistant  Treasurer  in  the  city  of  I^ew 
York,  in  sums  of  not  less  than  |50.  In  order  that  he 
might  alwaj'S  be  prepared  to  do  this,  lie  was  authorized 
"  to  use  any  surplus  revenue  from  time  to  time  in  the 
Treasm-y  not  otherwise  appropriated,  and  to  issue,  sell, 
and.  dispose  of,  at  not  less  than  par  in  coin,  any  of  the 
five,  four  and  one-half,  and  four  per  cent,  bonds  author- 
ized by  the  act  of  July  14,  1870.  Under  this  act  Sec- 
retary Sherman,  in  1877,  sold  at  par  in  coin  fifteen 
millions  of  four  and  one-half  per  cents,  and  twenty-five 
millions  of  four's  ;  and  in  April,  1878,  he  sold  fifty  mil- 
lions of  four  and  one-half  per  cents  at  a  premium  of  1^ 
per  cent.  This  coin  was  placed  in  the  Treasury  for  pur- 
poses of  resumption,  and  on  January  1,  1879,  the  Sec- 
retary held  135  millions  of  gold  coin  and  bullion,  and, 
in  addition,  over  thirty-two  millions  in  silver  coin  and 
bullion  ;  the  gold  coin  alone  being  nearly  equal  to  40 
per  cent,  of  the  United  States  notes  then  outstanding. 

The  Assistant  Ti'casurer  of  the  United  States,  at  New 
York,  became  a  menjber  of  the  clearing-house,  thus  fa- 
cilitating the  business  of  the  banks  with  the  Government, 


Ji2 


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SPECIE  RESUMPTION,   JANUARY  1,  1879.        143 

TliG  banks  in  Xew  York  strengthened  the  hands  of  tlie 
Government  bj  agreeing  to  receive  United  States  notes, 
no';  onjy  for  their  ordinary  bahances,  but  in  payment  of 
the  interest  upon  the  public  debt,  and  of  other  coin  ob- 
ligations of  the  Government.  The  banks  of  the  country, 
at  the  date  of  resumption,  held  more  than  one-third  of 
the  outstanding  treasury  notes ;  but  they  had  so  much 
confidence  in  the  ability  of  the  Seci'etary  to  maintain  re- 
sumption that  none  were  presented  by  them  for  redemp- 
tion. The  people  pi*eferred  the  issues  of  national  banks 
and  of  the  Government  to  coin  itself.  There  M^as,  there- 
fore, no  demand  for  payment  of  the  notes  of  the  Govern- 
ment, and  the  gold  coin  in  the  treasury,  which  amounted 
to  135  millions  on  the  day  of  resumption,  increased  more 
than  thirty-six  millions  in  the  next  ten  months.  The 
amount  held  on  November  1,  1879,  exceeded  171  mill- 
ions, and  on  November  1,  1883,  209  millions.  The 
amount  held  on  October  1,  1887,  was  $290,702,630,  in- 
cluding $97,984,683,  held  for  the  redemption  of  gold 
certificates  outstanding.  The  resumption  act  is  still  in 
force,  and  gives  the  Secretary  unlimited  power  with 
which  to  provide  for  the  redemption  in  coin  of  the  legal- 
tender  notes.  He  is  thus  enabled,  so  long  as  the  credit 
of  the  Government  continues  good,  to  check,  by  the  sale 
of  United  States  bonds,  any  exportation  of  coin  which 
miglit  endanger  the  redemption  of  the  United  States 
legal-tender  notes. 

From  the  date  of  the  passage  of  the  act  of  April  12, 
1866,  which  authorized  a  reduction  of  the  amount  of 
legal-tender  notes,  to  the  passage  of  the  act  of  July  12, 
1882,  enabling  national  banking  associations' to  extend 
their  corporate  existence,  a  period  of  more  than  sixteen 


11:4:  rXITED  STATES  NOTES. 

years,  liuiulrcds  of  l)ills()f  almost  every  conceivable  form 
to  regulate  the  cnn-ency  were  introduced  in  Cong)'ess. 
Throughout  the  country  the  subject  was  continually  dis- 
cussed, not  only  during  political  campaigns  and  at  pnblic 
conventions,  but  in  the  snuiUer  gatherings  of  the  school 
district  and  the  meetings  of  individuals  by  the  wayside. 
Speeches  and  political  pamphlets  by  the  thonsand,  essays, 
cam])aign  papers  innumerable,  and  caricatures  of  almost 
everv  kind  and  description,  npon  the  subject  of  the  ex- 
pansion and  contraction  of  the  currency,  and  its  effect 
upon  business,  were  distributed  broadcast  in  all  directions. 
Perliaps  the  most  plausible  argument  which  was  pre- 
sented, over  and  over  again,  in  every  portion  of  the  coun- 
try during  these  continued  discussions,  was  in  reference 
to  the  retirement  of  the  national  bank-notes,  and  the 
substitution  therefor  of  treasury  notes,  in  order,  as  was 
claimed,  to  save  to  the  Government  the  interest  npon  the 
bonds  held  by  the  national  banks  as  security  for  their 
circulating  notes.  Discussions  of  this  subject  in  its  vari- 
ous forms,  and  statements  of  the  profits  of  the  circula- 
tion of  the  national  banks  at  different  dates,  may  be 
found  in  the  reports  of  the  Comptroller  of  the  Currency 
during  the  last  nine  years. 

A  recent  and  distinguished  writer,  discussing  the  policy 
of  the  legal-tender  issues,  says  :  "  Grave  differences  of 
opinion  exist,  even  to  this  day,  concerning  the  neces- 
sity and  expediency  of  the  legal-tender  provision.  The 
judgment  of  many  whose  financial  sagacity  is  entitled 
to  respect  is  that  if  the  internal  tax  had  been  first 
levied,  and  the  policy  adopted  of  drawing  directly  npon 
the  banks  from  the  treasuiy  for  the  amounts  of  any 
loans  in  their  hands,  the  resort  by  the  Government  to 


BLAINE  ON  LEGAL    TENDER.  145 

irredeemaLle  paper  might  at  least  have  Leen  postponed 
and  possibly  prevented.  The  pretninni  on  gold  became 
the  measure  of  the  depreciation  of  the  government 
credit,  and  practically  such  premiums  were  the  charge 
made  for  every  loan  negotiated.  In  his  report  of  De- 
cember, 1862,  Secretary  Chase  justified  the  legal-tender 
policy.  He  explained  that  by  the  suspension  of  specie 
payments  the  banks  had  rendered  their  cunency  unde- 
sirable for  government  operations,  and  consequently  no 
course  other  than  that  adopted  M'as  open.  Mr.  Cliase 
declared  that  the  measures  of  genei'al  legislation  had 
M^orked  well.  '  For  the  fiscal  year  ending  with  June,' 
he  said,  '  eveiy  audited  and  settled  claim  on  the  Gov- 
ernment, and  every  quartermaster's  check  for  supplies 
furnished  which  had  reached  the  treasury,  had  been 
met.'  For  the  subsequent  months  the  Secretary  '  was 
enabled  to  provide,  if  not  fully,  yet  almost  fully,  for  the 
constantly  increasing  disbursements.' 

"  The  political  effects  of  the  legal-tender  bill  were  of 
large  consequence  to  the  Administration  and  to  the  suc- 
cessful conduct  of  the  war.  If  it  had  been  practicable 
to  adhere  rigidly  to  the  specie  standard,  the  national  ex- 
penditure Tuight  have  been  materially  i-educed  ;  but  the 
exactions  of  the  Avar  would  have  been  all  the  time  grat- 
ing on  the  nerves  of  the  people  and  oppressing  them 
with  remorseless  taxation.  Added  to  the  discoui-age- 
inent  caused  by  our  military  reverses,  a  heavy  financial 
burden  might  have  proved  disastrous.  The  Adminis- 
tration narrowly  escaped  a  damaging  defeat  in  18G3, 
and  but  for  the  relief  to  business  wliich  came  from  the 
circulation  of  legal-tender  notes,  the  political  struggle 
might  have  been  hopeless.     But  as  trade  revived  under 


140  UNiriW  STATES  NOTES. 

tlie  stimulus  of  an  expanding  circulation,  as  the  market 
for  eveiy  species  of  product  was  constantly  enlarging 
and  prices  were  steadily  rising,  the  su]~»port  of  the  war 
policy  became  a  far  more  cheei-ful  duty  to  the  mass  of 
our  people. 

"  This  condition  of  affairs  doubtless  carried  with  it 
many  elements  of  denioralization,  but  the  engagement 
of  the  people  in  schemes  of  money-making  proved  a 
great  support  to  the  war  ];)olicy  of  the  Government. 
"We  saw  the  reproduction  among  ns  of  the  same  causes 
and  the  same  effects  which  prevailed  in  England  dur- 
ing her  prolonged  contest  with  Xapoleon.  Money  was 
superabundant ;  speculation  was  rife  ;  the  Government 
was  a  lavish  buyer,  a  prodigal  consumer.  Every  man 
who  could  work  was  employed  at  high  wages ;  every 
man  who  had  commodities  to  sell  was  sure  of  high 
prices.  The  whole  community  came  to  regard  the  prev- 
alent prosperity  as  the  outgi'owtli  of  the  war.  The 
ranks  of  tlie  army  could  be  filled  by  paying  extravagant 
bounty  after  the  ardoi*  of  volunteering  was  past,  and  tlie 
hardship  of  the  struggle  was  thus  in  large  measure 
concealed  if  not  abated.  Considerate  men  knew  that 
a  day  of  reckoning  would  come,  but  they  believed  it 
would  be  postponed  until  after  the  war  was  ended  and 
the  Union  victorious. 

"  The  policy  of  the  legal  tender  measure  cannot  there- 
fore be  properly  determined  if  we  exclude  from  view 
that  which  may  well  be  termed  its  political  and  moral 
influence  upon  the  mass  of  our  people.  It  was  this 
which  subsequently  gave  to  that  form  of  cui-rency  a 
strong  hold  upon  the  minds  of  many  who  fancied  that 
its  stinnilating  effect  upon  business  and  trade  could  be 


POLITICAL  EFFECTS  OF  LEGAL   TENDER.     147 

reproduced  under  utterly  different  circumstances.  Ar- 
gument and  experience  liave  demonstrated  the  fallacy 
of  this  conception,  and  averted  the  evils  which  miglit 
liave  tlowed  from  it.  But  in  the  judgment  of  a  lai'ge 
and  intelligent  majority  of  those  who  were  contempo- 
rary with  the  Avar  and  gave  careful  study  to  its  progress, 
the  legal-tender  bill  was  a  most  effective  and  powerful 
auxiliary  in  its  successful  prosecution."  ' 

'  Twenty  Tears  of  Congress.     James  G.  Blaine.     Vol.  I.,  pp.  427- 
429.     Norwich,  Coun.  :  The  Henry  Bill  PuLlialiing  Company.    1-'^S4. 


CHAPTER  X. 

THE    SILVER   DOLLAB    AND   THE    SILVER    CERTIFICATE. 

The  act  of  April  2,  1792,  for  establishing  a  mint  and 
refill atino;  the  coinaa;e  of  the  United  State?,  anthorized 
the  free  coinage  of  a  silver  dollar  of  412.5  grains,  and 
this  provision  remained  in  force  until  1873. 

The  act  of  June  28,  1834,  which  reduced  the  gold 
standard  about  six  and  one-foui-th  per  cent.,  practically 
demonetized  the  silver  coinage.  Previous  to  the  date 
of  the  passage  of  that  act  American  gold  and  silver  coins 
of  all  denominations  were  equally  a  legal  tender,  and  the 
silver  coins  of  less  denomination  than  one  dollar  were 
chiefly  in  use,  only  $1,369,517  in  silver  dollars  having 
been  issued  from  the  mint  at  that  date.  The  act  of 
1834  overvalued  the  gold  coinage,  driving  from  the 
country  the  full-weight  silver  coins  previously  in  circula- 
tion ;  and  it  may  be  confidently  stated  that  from  1834 
to  1873  no  silver  dollar-pieces  had  been  presented  at 
any  custom-house  in  payment  of  duties.  The  entire 
customs-duties  of  the  country  during  this  period  were, 
with  the  exception  of  silver  used  in  change^  paid  in  gold 
coin,  and  from  this  fund  the  interest  paid  upon  the  pub- 
lic debt  has  been  chiefl}'  derived  ;  and  it  is  not  probable 
that  during  this  time  any  of  these  silver  dollar-pieces 
were  used  in  this  country  in  the  payment  of  debt,  except 


SILVER   COIN  THE  BASIS   UNTIL  18U.  149 

in  certain  cases  of  special  contract,  while  tliousands  of 
}uillions  in  gold  coin  have  been  used  to  liquidate  debts, 
both  public  and  private.  The  average  amount  in  silver 
dolhir-pieces  annually  coined  from  1S34  to  1873  was 
about  $160,000. 

From  1793 — the  date  of  the  first  issue  of  silver  coin 
by  the  United  States — to  1834  the  silver  and  the  gold 
dollar  were  alike  authorized  to  be  received  as  legal  ten- 
der in  payment  of  debt,  but  silver  alone  circulated. 
Subsequently,  however,  silver  was  not  used,  except  in 
fractional  payments,  or,  since  1853,  as  a  subsidiary  coin. 
The  silver  coin,  as  a  coin  of  circulation,  had  become 
obsolete.  The  reason  why,  prior  to  1834,  payments 
were  made  exclusively  in  silver,  and  subsequently^  to 
that  date  in  gold,  is  found  in  the  fact  that  prior  to 
the  legislation  of  1834  the  weight  of  fine  silver  in  the 
silver  dollar  was  fixed  at  fifteen  times  the  weight  of  fine 
gold  in  the  gold  dollar  ;  but  after  that  date,  owing  to  a 
reduction  in  the  weight  of  gold  required  for  the  standard 
gold  dollar,  the  silver  dollar  was  made  to  contain  of  fine 
metal  almost  precisely  sixteen  times  that  of  the  new 
gold  dollar,  the  actual  market  value  of  gold  during  the 
entire  period  having  been  greater  than  fifteen  and  less 
than  sixteen  times  the  value  of  silver  of  equal  weight. 
During  the  earlier  period,  therefore,  the  standard  silver 
coins  were  relatively  the  cheaper,  and  consequently  cir- 
culated to  the  exclusion  of  the  gold ;  while  during  the 
later  period  the  standard  gold  coins  were  the  cheaper, 
circulating  to  the  exclusion  of  the  silver. 

The  Coinage  Act  of  1873,  by  which  the  coinage  of  the 
silver  dollar  was  discontinued,  became  a  law  on  Febru- 
ary 12th  of  that  year.     The  act  of  February  28,  1878, 


150  UNITED  STATES  NOTES. 

\vliieli  passed  Congress  bj  a  two-thirds  vote  over  the 
veto  of  Fi'esident  Haj'es,  again  provided  for  the  coinage 
of  a  silver  dollar  of  412.5  gi-ains,  the  silver  bullion  to  be 
purchased  at  the  niai'ket  price  by  the  Government,  and 
the  amount  so  purchased  and  coined  not  to  be  less  than 
two  millions  of  dollars  per  month.  During  the  debate 
on  this  bill  the  charge  was  repeatedly  made,  in  and  out 
of  Congress,  that  the  previous  act  of  1873,  discontinuing 
the  free  coinage  of  tlie  silver  dollar,  was  passed  surrep- 
titiously.    This  statement  has  no  foundation  in  fact. 

The  report  of  the  writer,  who  was  then  Deputy  Comp- 
troller of  the  Currencj',  transmitted  to  Congress  in  ISTO 
by  the  Secretary,  three  times  distinctly  stated  that  the 
bill  accompanying  it  proposed  to  discontinue  the  issue 
of  the  silver  dollar-piece.'  Various  experts,  to  whom  it 
had  been  submitted,  approved  this  feature  of  the  bill, 
and  their  opinions  were  printed  by  order  of  Congress. 
The  House  was  informed  by  its  members  of  this  provi- 
sion, and  the  bill  was  printed  thirteen  times  by  order  of 
Congress,  and  once  by  the  commissioners  revising  the 
statutes,  and  was  considered  during  five  successive  ses- 
sions. If  the  question  of  the  double  standard  did  not 
become  prominent  in  the  discussion  upon  the  bill,  it  was 
for  the  reason  that  nsagehad  established  the  gold  dollar 
as  the  unit,  the  silver  dollar,  on  account  of  its  greater 
relative  value,  having,  Avitli  the  Mexican  dollar  and  the 
pistareen,  disappeared  from  the  circulation  of  the  coun- 
try. The  Coinage  Act  of  1873"  and  the  Hevised  Statutes 
of  1874  simply  registered  in  the  form  of  a  statute  what 

1  Senate,  Mis.  Doc.  No.  132,  XLI.  Cong.,  2d  Sess. 
-  For  the  history  of  the  Coinage  Act  of  1873,  see  pp.  170-175,  Re- 
port of  the  Comptroller  of  the  Currency  for  1876. 


COINAGE  ACT  OF  1873.  151 

IicicI  been  really  the  imwritten  law  of  the  land  for  nearly 
forty  years. 

It  is  not  probable  that  any  act  passed  by  any  Con- 
gi-ess  ever  received  more  care  in  its  preparation,  or  was 
ever  submitted  to  the  criticism  of  a  greater  number  of 
pnictical  and  scientific  experts'  than  was  this  Coinage 
Act  of  1873.  The  statements  in  reference  to  the  surrep- 
titious or  inadvertent  passage  of  the  bill  was  subsequently 
repeated  in  the  city  of  Paris  by  a  member  of  the  Silver 
Commission. 

A  well-known  scientific  author  ^  and  writer  on  finan- 
cial subjects,  in  criticising  the  report  of  the  Paris  Silver 
Commission,  says  : 

"  Another  act  which  must  have  placed  our  commis- 
sioners at  a  moral  disadvantage  \vas  their  filing  the  hu- 
miliating plea  that  the  act  of  1873,  demonetizing  the 
silver  dollar,  was  passed  through  inadvertence. 

"It  is  difficult  to  see  what  this  plea  meant,  what  re- 
lation it  had  to  the  business  of  the  conference,  or  what 
object  was  to  be  gained  by  raising  it.  If  a  proposed 
law  can  be  debated  in  Congress  for  five  years,  be  reported 
several  times  from  committees  in  various  forms,  be  rec- 
ommended by  the  Secretary  of  the  Treasury  in  at  least 
one  amuial  report,  finally  pass  both  Houses  of  Congress, 
and  be  signed  by  the  President,  then  remain  on  the 
statute-books  for  two  or  three  years  without  any  one 
knowing  it,  and  all  through  '  inadvertence,'  what  shall 
we  say  of  our  political   system,  or  of  the  attention  of 


'  H.  R,  Ex.  Doc.  No.  807,  XLT.  Cong.,  2d  Sess. 
''The    Silver    Commi^^sion  aii<l  tlie  Silver  Question,  \>y  Profes.'^or 
Simon  Newcomb  :  Int»;riaatioual  Review,  Marclx,  1879. 


]''2  UNITED  STATES  NOTES. 

our  people  or  our  legislators  to  public  affairs  ?  Every 
one  who  cares  for  the  good  name  of  his  countiy  will 
certainly  say,  '  Try  to  keep  the  fact  out  of  the  newspa- 
pers, and  by  no  means  confess  it  to  our  neighbors,'  The 
plea  was  as  pointless  as  humiliating.  Had  our  delegates 
frankly  said  that  at  the  time  of  the  passage  of  the  act 
silver  had  long  ceased  to  circulate  in  their  country,  ex- 
cept as  a  subsidiary  coin  ;  that,  therefore,  the  legislation 
discontinuing  its  coinage  and  legal  tender  was,  at  the 
time,  only  a  matter  of  form,  the  acceptance  of  a  histori- 
cal fact ;  bat  that  the  extraordinary  fall  in  the  price  of 
silver  which  had  occurred  in  the  meantime  had  again 
called  public  attention  to  the  subject,  and  convinced  us 
that  silver  should  be  money  of  full  power,  and  thus  led 
us  to  retrace  our  steps,  the  statement  w^ould  have  been 
correct  and  frank,  and  would  have  produced  a  much 
better  effect  than  did  the  plea  actually  put  forward." 

The  act  of  February  28,  1878,  also  authorized  the 
holder  of  these  silver  dollars  to  deposit  the  same  with 
the  Treasurer,  or  any  Assistant  Treasurer,  of  the  United 
States,  in  sums  not  less  than  ten  dollars,  and  receive 
therefor  certificates  of  not  less  than  ten  dollars  each, 
corresponding  with  the  denominations  of  the  United 
States  notes.  It  required  that  the  coin  deposited  or  rep- 
resenting the  certificates  should  be  retained  in  the  treas- 
Vivy  for  the  payment  of  the  same  on  demand,  and  that 
said  certificates  should  be  receivable  for  customs,  taxes, 
and  all  public  dues,  and  also  authorized  their  reissue. 
This  act  did  not  authorize  their  use  as  clearing-house 
certificates,  nor  make  them  available  as  lawful  reserve 
for  the  national  banks.  The  following  table  shows  the 
amount  of  standard  silver  dollars  coined  under  the  act  of 


EAril)  INCREASE  OF  SILVER   COINAGE.        153 


February  2S,  1S78,  the  amount  in  tlio  treasurj',  and  the 
amount  of  silver  certiticates  outstanding  on  July  1st, 
from  1878  to  1884,  and  on  October  1,  1S87  : 


1878 

1879 

1880 , 

1881 

1882 

1883 

1884 

1887,  October  1 


Coinage. 


$8,573,500 

35,801,000 

03,734,750 

91,372,605 

119.144,780 

147,255,899 

175,355,829 

273,600,157 


Amount  in  treas- 
ury. 


$7,718,357 

28,358,589 

45,108,296 

63,349,300 

87,524,182 

111,914,019 

135,560,916 

213,043,790 


Silver  certi- 
ficates out- 
Ktanding. 


$1,850,410 
2,529,950 
12,374,270 
55,166,530 
66,096,096 
88,616,831 
96,427,011 
154,354,826 


This  table  exhibits  the  rapid  increase  in  the  coinage 
of  the  silver  dollar  and  in  the  issne  of  silver  certificates. 
The  law  requires  the  purchase  of  not  less  than  two 
millions  of  silver  bullion  each  month  for  coinage  into 
silver  dollars.  It  provides  for  a  forced  coinage  of  silver 
dollars  at  the  e.xpense  of  the  gold  coin  in  the  treasury  ; 
and  the  various  efforts  to  repeal  this  law  have  been  fruit- 
less. If  not  repealed  the  result  will  be,  not  long  hence, 
the  demonetization  of  the  gold  coin  which  is  now  the 
standard,  and  the  substitution  of  the  silver  dollar  in  place 
thereof.  This  law  would  doubtless  have  been  repealed 
long  since  if  silver  certificates  had  not  been  issued  in  place 
of  the  silver  dollar,  the  latter  coin  becoming  unpopular 
when  forced  upon  a  people  so  long  accustomed  to  a  paper 
medium.  The  silver  certificate,  which  is  a  substitute  for 
the  cumbrous  dollar,  performs  every  service  of  the  coin 
itself,  with  a  single  exception.  It  is  not  a  legal  tender  in 
payments  between  individuals,  but  it  is  receivable  in  pay- 
ment of  all  public  dues,  may  be  included  in  the  reserves 
of  the  banks,  and  used  in  the  payment  of  clearing-house 


154  VXITI-JD  STATES  NOTES. 

halanccs.  Even  the  legal-tender  note  is  not  and  never 
lias  been  authorized  to  be  received  in  payment  of  customs 
duties. 

The  cost  of  the  transportation  of  gold  coin  between 
remote  points  is  so  great  that  many  millions  of  gold  coin 
liave  been  exchanged  during  the  last  two  years  for  paper 
silver  certificates,  the  treasury  itself,  without  any  spe- 
cial authority  of  law,  encouraging  in  this  way  the  circula- 
tion of  this  inferior  medium,  which  is  issued  against 
deposits  of  silver  dollars  only,  thus  rendering  this  other- 
wise undesirable  silver  coinage  available  for  use  by  the 
banks  and  the  people. 

In  the  opinion  of  those  who  believe  in  a  single  gold 
standard,  the  silver  certificate  is  a  most  dangerous 
substitute  for  money.  The  recent  decision  of  the  Su- 
preme Court  places  in  Congress  the  power  to  increase 
the  issue  of  legal-tender  notes  at  all  times,  and  there  is 
great  danger  that  every  commercial  crisis  or  sudden 
panic,  or  cry  of  hard  times,  may  be  succeeded  by  legis- 
lation which  shall  increase  the  issue  of  the  greenback 
and  reduce  its  value  even  below  the  level  of  the  silver 
certificate  ;  the  former  being  a  promise  to  pay  dollars 
either  gold  or  silver,  while  the  latter  represents  the 
silver  coin  itself  safely  stored  in  the  vaults  of  the 
treasury. 

The  Government  may  at  any  tiine  bring  the  nation 
upon  the  silver  standard  by  declining  to  make  payments 
or  to  redeem  the  legal-tender  notes  in  gold,  thus  taking 
from  the  holder  the  option  of  payment.  In  such  an 
event  the  hoard  of  coin  will  not  be  increased  by  customs 
duties  paid  in  gold  as  at  present,  but  by  the  return  of 
silver   dollars   and   silver    certificates   and   legal-tender 


GOLD    CERTIFICATES.  155 

notes,  tlms  demonetizing  all  of  the  gold  coin  of  the 
country,  and  advancing  prices  to  the  level  of  the  silver 
standard. 

The  act  of  July  12,  1882,  authorized  and  directed  the 
Secretary  of  the  Treasury  to  receive  deposits  of  gold 
coin  in  denominations  of  not  less  than  $20  each,  coi-res- 
ponding  with  the  denominations  of  the  United  States 
notes.  The  coin  deposited  for  the  certificates  is  re- 
quired to  be  retained  for  the  payment  of  the  same  on 
demand,  and  these  certificates,  and  also  silver  certificates, 
are  authorized  to  be  counted  as  part  of  the  lawful  re- 
serve of  the  national  banks.  The  act  also  provides,  not- 
withstanding the  fact  that  these  issues  are  not  a  legal 
tender,  that  no  national  banking  association  shall  be  a 
member  of  any  clearing-house  in  which  such  certificates 
shall  not  be  receivable  in  the  settlement  of  clearing- 
house balances. 

The  amount  of  gold  certificates  which  have  been  is- 
sued under  the  act  of  Julj^  12,  1882,  was,  on  Novem- 
ber 1st,  $21,790,000,  and  on  April  1, 1884,  $87,874,500, 
and  on  October  1,  1887,  $95,630,083. 

The  act  of  August  4,  1886,  authorized,  for  the  first 
time,  the  issue  of  silver  certificates  of  the  denomination 
of  five  and  two  dollars  and  one  dollar.  The  amount  of 
certificates  of  these  denominations  outstanding  on  Octo- 
ber 1, 1887,  was,  one's,  $17,595,173 ;  two's,  $10,987,553 ; 
five's,  $13,900,935.     Total,  $42,483,661. 


CHAPTER  XL 

THE   LEGAL-TENDER    CASES    IN   THE    SUPREME    COURT    OF 
THE   UNITED    STATES. 

On  April  30,  18C6,  the  Legislature  of  New  York  pro- 
vided bj  law  for  refunding  to  the  banks  and  other 
corporations  in  like  condition,  the  taxes  of  1863  and  1864 
collected  upon  tliat  part  of  their  capital  invested  in  securi- 
ties of  the  United  States  exempt  by  law  from  taxation. 
The  Board  of  Supervisors  of  the  County  of  New  York 
was  charged  with  the  duty  of  auditing  and  allowing, 
with  the  approval  of  the  Mayor  of  the  city  and  the  Cor- 
poration Counsel,  the  amount  collected  from  each  corpor- 
ation for  taxes  on  the  exempt  portion  of  its  capital,  to- 
gether with  costs,  damages,  and  interest.  This  act  M'as 
passed  in  conformity  with  the  decisions  of  the  United 
States  Supreme  Court  in  Bank  of  Commerce  vs.  New 
Y'ork  City  (reported  in  2  Black,  620),  and  in  the  Bank  Tax 
Case  (reported  in  2  Wallace,  200),  which  decided  that  a 
tax  on  banking  capital  invested  in  Government  securi- 
ties— being  a  tax  on  the  obligations  of  the  United  States, 
by  State  authority — was  void.  The  Bank  of  New  York 
presented  a  claim  to  the  said  Board  of  Supervisors  for 
the  refunding  of  those  taxes  which  the  bank  had  paid  on 
the  United  States  notes  commonly  called  "greenbacks" 
during  the  3'ears  aforesaid.     The  Board  refused  the  ap- 


LEGAL   TEND  Ens  NOT  TAXABLE.  157 

plication  on  the  gvonnd  that "  greenbacks "  were  not 
"  securities  "  of  the  United  States  Government,  but  were 
practically  and  in  effect  "  monej',"  taxable  as  cash.  The 
Conrt  of  Appeals  of  the  State  of  IRew  York  sustained 
the  action  of  the  Board,  but  on  appeal  to  the  United 
States  Supreme  Court  (Bank  t^s.  The  Supervisors,  7  Wal- 
lace, 26),  that  court,  at  its  December  term,  1808,  re- 
versed the  opinion  of  the  State  court. 

The  court  said :  "  The  act  of  February,  1862,  declares 
that  'AH  United  States  bonds  and  other  securities  of  the 
United  States  held  by  individuals,  associations,  or  cor- 
porations within  the  United  States,  shall  be  exempt  from 
taxation  by  or  under  State  authority.'  We  have  already 
said  that  these  notes  are  obligations.  They  bind  the 
national  faith.  They  are,  therefore,  strictly  securities. 
They  secure  the  payment  stipulated  to  the  holders  by 
the  pledge  of  the  national  faith,  the  only  ultimate  secu- 
rity of  all  national  obligations,  whatever  form  they  may 
assume." 

On  June  20,  1860,  a  certain  Mrs.  Hepburn  made  a 
pi'omissory  note,  by  which  she  promised  to  pay  to  Henry 
Griswold,  on  February  20,  1862,  eleven  thousand  two 
hundred  and  fifty  "  dollars."  At  the  time  when  the  note 
was  made,  and  also  at  the  time  when  it  fell  due,  there  was, 
confessedly,  no  lawful  money  of  the  United  States,  or 
money  which  could  be  lawfully  tendered  in  payment  of 
private  debts,  but  gold  and  silver  coin.  Five  days  after 
the  day  when  the  note  by  its  terms  fell  due,  that  is  to  say, 
on  February  25, 1862,  Congress  passed  the  first  legal-ten- 
der act,  commonly  so  called,  by  which  the  United  States 
notes  issued  thereunder  were  made  a  legal  tender  for 
"  all  debts,  public  and  private,  within  the  United  States," 


15S  UNITED  STATES  NOTES. 

except  certain  public  debts.  In  JNFarcb,  1SG-1-,  Mrs.  Hep- 
burn, ba\ing  been  sued  un  the  note  in  the  Louisville 
Chancery  Court,  in  the  State  of  Kentucky,  tendered  pay- 
ment of  tlie  debt,  pi-incipal  and  interest,  in  the  United 
States  notes  issued  under  this  act.  The  amount  ten- 
dered, $11,250  in  legal-tender  notes,  at  that  time  was 
worth  only  about  $7,000  in  coin.  The  tender  was  re- 
fused. The  notes  were  then  tendered  and  paid  into 
court.  It  was  declared  by  the  Chancellor  to  be  a  satis- 
faction of  the  debt.  The  case  was  appealed  to  the  Court 
of  Errors  of  Kentucky.  That  court  reversed  the  Chan- 
cellor's decision,  and  ordered  a  contrary  judgment  to  be 
entered.  Whereupon  Mrs.  Hepburn  took  the  case  to 
the  United  States  Supreme  Court,  where  it  was  tirst  ar- 
gued upon  printed  briefs  at  the  December  term,  180  7, 
and  afterward  reargued  by  very  numerous  and  able 
counsel  at  the  December  term,  1808,  but  not  decided  un- 
til the  December  term,  18G9  (Hepburn  ?;5.  Griswold,  8 
"Wallace,  603).  The  court  was  comprised  of  Mr.  Chief 
Justice  Chase  and  Associate  Justices  Xelson,  Clifford, 
Field,  Grier,  Davis,  Miller,  and  Swayne.  Mr.  Justice 
Grier  resigned  before  the  opinion  of  the  court  was  an- 
nounced, but  agreed  with  the  majority  in  the  consultation 
room,  as  was  announced  by  the  Chief  Justice.  The 
Chief  Justice  delivered  the  opinion  of  the  court.  In 
this  opinion  Justices  Kelson,  Clifford,  and  Field  con- 
curred. The  court  held  that  the  language  of  the  act  of 
February  25, 1862,  making  the  United  States  notes  issued 
thereunder  "  a  legal  tender  in  payment  of  all  debts,  pub- 
lic and  private,  within  the  United  States,"  included  pre- 
existing debts  as  well  as  debts  which  should  be  incurred 
after  the  passage  of  the  act,  and  while  it  might  be  an 


LEGAL   TENDER  ACT  UNCONSTITUTIONAL.      159 

exercise  of  riglitf  iil  power  in  Congress,  under  the  powers 
granted  it  by  the  Constitution,  to  declare  war,  suppress  in- 
surrection, raise  and  support  armies  and  navies,  borrow 
money  on  tiie  credit  of  the  United  States  to  pay  the  debts 
of  the  Union,  and  to  provide  for  the  conmion  defence  and 
general  welfare — to  emit  bills  of  credit  or  United  States 
notes  intended  to  circulate  as  money,  and  make  the  same 
legal  tender  for  debts  to  be  incurred  after  the  passage 
of  the  act,  yet  inasmuch  as  the  act  by  construction  de- 
clared these  notes  to  be  legal  tender  in  payment  of  pre- 
existing debts,  that  the  act  was  inconsistent  witli  the  spirit 
of  the  Constitution,  and  was  not  a  law  "  necessary  and 
proper  "  for  carrying  into  execution  the  powers  vested 
by  the  Constitution  in  Congress  or  in  the  Government 
of  the  United  States.  The  Constitution  reads  that 
Congress  shall  have,  besides  certain  powers  granted  in 
express  terms,  "  power  to  make  all  laws  which  shall  be 
necessary  and  proper  for  carrying  into  execution  the  fore- 
going powers,  and  all  other  powers  vested  by  this  Consti- 
tution in  the  Government  of  the  United  States,  or  in  any 
department  or  offices  thereof."  The  court  held  that  the 
legal-tender  clause  was  unnecessary  and  improper  ;  that 
the  notes  would  have  maintained  themselves  equally 
well  without  it.  The  Chief  Justice  quoted  the  fact  that 
the  three  hundred  millions  of  dollars  in  notes  issued  by 
the  national  banking  associations  under  the  act  of  Feb- 
ruary, 1SC3,  and  the  fifty  millions  of  fractional  currency 
issued  under  the  act  of  March,  1SG3,  were  not  made  a 
legal  tender,  and  a]-gued  that  it  was  the  quality  of  re- 
ceivability  for  public  dues,  and  not  the  quality  of  legal 
tender  which  made  these  United  States  notes  circulate  as 
freely  as  they  did.     The  Chief  Justice  declared  that  the 


160  UNITED  STATES  NOTES. 

act  was  ohnoxions  to  tliose  clauses  of  the  Constitntion, 
also,  which  forbade  the  iiiipairmeut  of  the  obligations 
of  contracts,  the  taking  of  private  property  for  public 
nse  without  compensation,  and  the  deprivation  of  any 
person  of  his  property  without  due  process  of  law. 
And  that  the  Constitution  was  ordained  to  "  establish 
justice,"  which  this  act  did  not  do,  so  far  as  regards 
pre-existing  debts.  For  all  of  which  reasons,  elabor- 
ately stated,  the  court  held  the  act  unconstitutional  and 
tlierefore  void. 

Mr.  Justice  Miller,  with  whom  concurred  Justices 
Davis  and  Swayne,  delivered  a  dissenting  opinion.  lie 
held  that  what  was  "  necessary  and  proper  "  to  carry 
into  execution  the  powers  vested  by  the  Constitution 
in  the  Government  of  the  United  States,  cannot  right- 
fully be  construed  to  mean  only  such  legislation  as 
is  indispensably  necessary,  but  that  Congress  has  the 
choice  of  means,  and  is  empowered  to  use  any  means 
which  are,  in  fact,  conducive  to  the  exercise  of  the 
power  granted  or  calculated  to  produce  the  end  de- 
sired. He  fortified  this  position  by  the  clear,  strong  deci- 
sions of  the  court  delivered  by  Chief  Justice  Marshall, 
who  announced  this  exposition  of  the  Constitution  in 
United  States  vs.  Fisher  (2  Cranch,  358)  and  in  McCul- 
loch  m.  The  State  of  Maryland  (4  Wheaton,  316).  He 
further  said  that,  while  the  Constitution  forbade  any 
State  from  impairing  the  obligation  of  a  contract,  it  said 
nothing  about  the  power  of  Congress  in  the  premises. 
And  that  the  provision  that  private  property  should  not 
be  taken  for  public  use  without  due  compensation,  nor 
any  person  be  deprived  of  his  property  without  due 
course  of   law,  had  no  application  to  the  indirect  ef« 


DISSENTING   OPINION  OF  JUSTICE  MILLER.      101 

feet  of  great  public  measures  whereby  lands,  stocks, 
contracts,  etc.,  might  depreciate  in  value,  because,  for  in- 
stance, such  an  effect  would  doubtless  succeed  an  imme- 
diate abolition  of  the  tariff  on  iron  by  depreciating  the 
value  of  furnaces  and  the  capital  employed  in  its  man- 
ufacture, and  yet  no  one  would  claim  that  such  a  re- 
peal was  therefore  unconstitutional  and  void.  That  the 
whole  argument  of  the  injustice  of  the  law  and  of  its 
being  opposed  to  the  spirit  of  the  Constitution  M'as  too 
abstract  and  intangible  for  application  to  courts  of  jus- 
tice. That  the  act  M'as  passed  to  save  the  life  of  the  Gov- 
ernment, to  pay  its  soldiers  and  sailors,  and  other  public 
debts.  That  the  legal-tender  clause  was  considered 
"necessary  and  proper"  by  Congress,  and  that  the 
courts  had  no  right  to  interfere  with  that  discretion. 
"  It  would  authorize  this  court  to  enforce  theoretical 
views  of  the  genius  of  the  Government,  or  vague  notions 
of  the  spirit  of  the  Constitution  and  of  abstract  justice, 
by  declaring  void  laws  wliich  did  not  square  with  those 
views.  It  substitutes  our  ideas  of  policy  for  judicial 
construction,  an  undefined  code  of  ethics  for  the  Consti- 
tution, and  acourtof  justice  forthelS^ational  Legislature." 
One  Parker  (Legal-Tender  Cases,  12  Wallace,  457) 
was  under  contract  to  convey  a  lot  of  land  to  one  Davis, 
upon  payment  of  a  certain  sum  of  money.  The  contract 
was  dated,  and  suit  was  brought  upon  it  before  the  pas- 
sage of  any  of  the  legal-tender  acts.  After  their  pas- 
sage, to  wit,  in  February,  1SG7,  the  Supreme  Court  of 
Massachusetts  decreed  that  Davis  should  pay  into  court 
a  certain  sum  of  money,  and  that  Parker  should  there- 
upon execnt-e  a  deed  to  him  for  the  land  in  question. 
Davis   accordingly  paid   into   court   tlie  given   sum  in 


162  UNITED  STATES  NOTES. 

United  States  notes.  Parker  refused  to  execute  the  deed 
on  the  ground  that  he  was  entitled  to  coin  ;  whereujwn 
the  court  changed  the  decree,  and  ordered  that  Parker 
sliould  execute  tlie  deed  upon  payment  by  Davis  into 
court  of  tlie  specificed  sum  in  United  States  notes. 

From  that  decree  the  case  was  appealed  to  the  United 
States  Supreme  Court.  The  ease  was  argued  at  its  De- 
cember term,  ISTO,  and  decided  on  May  1,  1871 ;  and 
on  January  15,  1S73,  the  opinion  of  the  court  was  de- 
livered by  Justice  Strong,  who,  with  Justice  Bradley, had 
been  added  to  the  court  in  1870,  by  President  Grant, 
making  a  full  bench  of  nine.  The  other  justices  had 
sat  in  the  case  of  Hepburn  vs.  Griswold.  The  court 
overruled  the  latter  case  and  held  the  legal-tender  acts 
to  be  constitutional  both  as  respects  contracts  made  be- 
fore their  enactment  as  well  as  after.  The  court  said, 
in  reference  to  the  case  of  Hepburn  vs.  Griswold : 
"  That  case  was  decided  by  a  divided  court,  and  by  a 
court  having  a  less  number  of  judges  than  the  law  then 
in  existence  provided  that  this  court  shall  have.  These 
cases  have  been  heard  before  a  full  court,  and  they  have 
received  our  most  careful  consideration." 

Mr.  Justice  Bradley,  in  his  separate  concurring  opinion, 
said  :  "  And  in  this  case,  with  all  deference  and  respect 
for  the  former  judgment  of  the  court,  I  am  so  fully  con- 
vinced that  it  was  erroneous  and  prejudicial  to  the  rights, 
interests,  and  safety  of  the  general  Government,  that  I, 
for  one,  have  no  hesitation  in  reviewing  and  overruling 
it.  It  should  be  remend^ered  that  this  court,  at  the 
very  '.erm  in  which,  and  within  a  few  weeks  after,  the 
decision  in  Hepbui-n  vs.  Griswold  was  delivered,  Avhen 
the  vacancies  on  the  bench  were  filled,  determined  to 


PREVIOUS  OPINION  OVERRULED.  163 

hear  the  question  reargued.  This  fact  must  necessarily 
liave  had  the  effect  of  apprising  tlie  country  that  the  de- 
cision was  not  fully  acquiesced  in,  and  of  obviating  any 
injurious  consequences  to  the  business  of  the  country  by 
its  reversal." 

Justice  Strong,  in  delivering  the  opinion  of  the  court, 
reiterated  and  enforced  the  arguments  made  by  the 
minority  in  Hepburn  vs.  Grisvvokl.  He  held  tliat  the 
distinction  made  by  the  Chief  Justice  in  regard  to  the 
constitutional  validity  of  the  act  as  to  debts  contracted 
after  its  passage  and  debts  conti-acted  before,  was  not 
Avell  founded,  and  that  the  fundamental  question  Avas, 
Can  Congress  constitutionally  give  to  United  States 
notes  the  character  and  quality  of  money  ?  If  they  can, 
then  such  notes  can  be  made  legally  available  to  fulfil 
all  contracts  solvable  in  money,  without  reference  to 
the  time  when  such  contracts  were  made,  unless  ex- 
pressly othei-wise  provided. 

It  was  not  insisted  that  Congress  might  make  money 
of  that  which  possessed  no  value.  "  What  we  do  assert 
is,  that  Congress  lias  power  to  enact  that  the  Govern- 
ments promises  to  pay  monej^  shall  be,  for  the  time  being, 
equivalent  in  value  to  the  representative  of  value  deter- 
mined by  the  coinage  acts,  or  to  multiples  thereof." 
And  that,  therefore,  all  contracts  calling  for  "  dollars  " 
simply,  can  be  legally  fulfilled  by  a  tender  of  the  Gov- 
ernment's promises  to  pay  dollars,  by  force  of  the  legal- 
tender  acts,  without  regard  to  date.  And  on  this  point 
Mr.  Justice  Bradley,  in  his  concurring  opinion,  after  no- 
ticing that  life,  liberty,  and  property  are  enuallj  sub- 
ject to  be  impaired,  from  the  exercise  of  undoubted 
national  powers  in    times  of   emei'gency   or   necessity, 


164  UNITED  STATES  NOTES. 

says:  "  So  with  the  power  of  tlie  Government  to  borrow 
money,  a  power  to  be  exercised  by  the  consent  of  the 
lender,  if  possible,  but  to  be  exercised  without  his  con- 
sent if  necessary.  And  when  exercised  in  the  form  of 
legal-tender  notes  or  bills  of  credit,  it  may  operate  for 
the  time  being  to  compel  the  creditor  to  receive  tlie 
credit  of  the  Government  in  place  of  the  gold  which  lie 
expected  to  receive  from  his  debtor.  All  these  are  fun 
damental  political  conditions  on  which  life,  property,  and 
money  are  respectively  held  and  enjoyed  under  our  sys- 
tem of  government,  nay,  under  any  system  of  govern- 
ment. There  are  times  when  the  exigencies  of  the 
State  rightly  absorb  all  subordinate  considerations  of 
private  interest,  convenience,  or  feeling ;  and  at  such 
times  the  temporary,  though  compulsory,  acceptance  by 
a  private  creditor  of  the  Government  credit,  in  lieu  of 
his  debtor's  obligation  to  pay,  is  one  of  the  sliglitest 
forms  in  which  the  necessary  burdens  of  society  can  be 
sustained.  Instead  of  being  a  violation  of  such  obliga- 
tion, it  mei'ely  subjects  it  to  one  of  those  conditions 
under  which  it  is  held  and  enjoyed." 

The  Chief  Justice,  with  whom  concuri-ed  Justices  Kel- 
son, Field,  and  Clifford,  delivered  a  dissenting  opinion. 
He  strenuously  maintained  his  former  views,  as  did  also 
Justices  Field  and  Clifford,  in  separate  opinions.  Tlie 
burden  of  their  argument  was,  that  the  Constitution  for- 
bade any  State  to  make  anything  but  gold  and  silver  a 
legal  tender,  and  granted  to  the  Government  only  the 
right  to  coin  this  gold  and  silver,  and  regulate  the  value 
thereof  and  of  foreign  coin.  And  while  the  power  to 
emit  treasury  notes  was  conceded  as  one  means  of  bor- 
rowing money,  yet  that  Congress  had  no  right  to  make 


DISSENT  OF  CHIEF  JUSTICE  CHASE.  165 

such  notes  money,  or  legal  tender  as  money.  Mr.  Jus- 
tice Clifford  showed  that  the  words  "and  emit  bills  on 
the  credit  of  the  United  States"  were  originally  reported 
ill  article  seven,  in  the  draft  of  the  Constitution  as  sub- 
mitted to  the  convention.  Mr.  Morris  moved  to  strike 
the  clause  out  on  the  ground  that  it  was  unnecessar}', 
and  a  vicious  suggestion  of  a  power  which  would  be 
unquestionably  used  anyhow  without  it.  Mr.  Madison 
thought  it  would  be  sufficient  to  let  the  clause  remain, 
as  it  did  not  contain  the  hurtful  power  to  make  such 
bills  legal  tender,  but  finally  voted  in  favor  of  striking 
out  the  clause  entirely  as  was  done,  as  elin)inating  even 
a  ''^j.yretext  for  a  j^ajyer  currency.,  and  j>artiGula7''ly  for 
inaking  the  hills  a  tender  either  for  jpuhlic  or  jjrivate 
dehts,^''  without  disabling  the  Government  from  the  use 
of  treasury  notes. 

One  Juilliard,  a  citizen  of  New  York,  made  a  sale  of 
cotton  to  one  Greenman,  the  defendant,  wdio  is  a  citizen 
of  Connecticut,  in  Api-il,  1879,  for  $5,122.90,  payable  on 
delivery.  The  defendant  tendered  in  payment  $5,100 
in  United  States  notes  of  the  series  of  1ST8,  which  had 
been  redeemed  and  reissued  under  the  act  of  May  31, 
ISrS,  and  $22.90  in  gold  and  silver  coin.  The  coin 
was  accepted,  but  the  tender  of  the  United  States  notes 
was  rejected,  and  Juilliard  claims  judgment  for  $5,100 
with  interest  and  costs.  The  case  was  submitted  in  the 
United  States  Circuit  Court  at  isew  York  in  June  with- 
out assignment,  and  a  pro  forma  decision  was  rendered 
for  the  defendant,  whereupon  the  plaintiff  appealed  to 
the  Supreme  Court. 

The  opinioii  of  the  court  in  the  first  legal-tender  case 
submitted,  which  was  concurred  in  by  five  judges  out  of 


lOG  UNITED  STATES  NOTES. 

eight,  was  that  at  no  time  could  Congress  constitution- 
ally give  the  quality  of  legal  tender  to  United  States 
notes.  Then  came  the  decision  of  the  United  States 
Supreme  Court,  after  the  number  of  judges  had  been  in- 
creased to  nine,  making  these  notes  a  legal  tender  for 
all  debts,  whether  contracted  before  the  passage  of  the 
legal-tender  act  or  after  that  date.  The  constitutionality 
of  the  legal-tender  acts  was  based  upon  the  war  powers 
of  Congress,  leaving  the  question  still  open  whether  said 
notes  could  be  issued  in  time  of  peace. 

The  decision  of  the  Supreme  Court  delivered  during 
the  present  term,  wdiicli  has  been  concurred  in  by  eight 
judges,  with  but  one  dissentient,  holds  that  under  the 
Constitution  Congress  has  power,  if  it  deems  it  expe- 
dient, to  issue  legal-tender  notes  to  any  amount  either 
in  time  of  peace  or  war. 

The  opinion  of  the  court  and  the  dissenting  opinion 
are  given  in  the  Appendix. 

Since  these  opinions  were  rendered,  resolutions  have 
been  introduced  in  the  present  Congress,  both  in  the 
Senate  and  the  House,  proposing  an  amendment  of  the 
Constitution  in  regard  to  the  issue  of  legal-tender  paper 
money.  As  the  Constitution  provides  that  amendments 
to  it  sliall  be  concurred  in  by  a  vote  of  two-thirds  of 
each  House,  and  subsequently  ratified  by  three-fourths 
of  the  Legislatures  of  the  several  States,  it  is  probable 
that  the  questions  presented  in  this  volume  will  con- 
tinue to  be  discussed,  both  in  Congress  and  by  the 
people  for  many  years  to  come. 


CHAPTER  XII. 

THE    DISTRIBUTION    OF   THE    SURPLUS    AMONG   THE    STATES. 

The  following  historical  sketch  is  properly  included  in 
this  volume,  not  alone  on  account  of  the  recent  dis- 
cussion of  similar  pi-opositions  and  the  introduction  of 
similar  measures  in  Congress,  but  also  for  the  reason,  as 
may  be  seen  by  reference  to  Chapter  YI.,  that  the  dis- 
tribution of  the  surplus  was  the  immediate  cause  of  the 
issue  of  treasury  notes  during  the  period  of  the  finan- 
cial crisis  of  1837. 

The  report  of  the  Secretary  of  the  Treasury,  William 
H.  Crawfoid,  for  1816,  and  his  reports  and  those  of  his 
successoi',  Hichard  Hush,  for  succeeding  years  up  to  1827, 
had  in  the  estimates  made  shown  an  available  sin'plus 
of  revenues  over  all  expenditures  of  from  two  to  six 
millions  of  dollars.  This  led  to  some  discussion  as  to 
the  best  method  of  employing  this  surphis.  Secretary 
Crawford  suggested  in  181G  that  it  be  used  in  internal 
improvements. 

In  1827  the  first  proposition  to  distribute  the  surplus 
was  made  in  Congress,  A  bill  for  the  distribution  of 
$5,000,000  annually  for  four  years  was  introduced  and 
Laid  on  the  table.  On  motion  of  Mr.  Dickerson,  of  IS^ew 
Jersey,  the  author  of  the  measure,  it  was  taken  up  for 
discussion.     He  stated  its  principal  object  to  be  to  pro- 


lOS  UNITED  STATES  NOTES. 

viilc  tlic  States  witli  money  for  edneatioiuil  and  internal 
improvenionts.  But  Congress  adjourning  soon  alter- 
■\vard,  it  received  but  little  attention. 

The  Secretary  of  the  Treasury  (Ingham),  in  his  report 
to  Congress  in  December,  1829,  estimated  that  the  reve- 
nues of  the  Government  for  that  year  wonld  amount,  in- 
cluding the  balance  on  hand  on  January  1st,  to  $30,574,- 
Q>m,  and  the  expenditures  to  $26,164,595,  of  which 
$9,841,011  was  on  account  of  principal  and  $2,563,994 
on  account  of  interest  of  the  public  debt.  He  also  esti- 
mated that  the  public  revenue  for  the  next  five  years 
would  be  such  as  to  leave  free  for  application  to  the  pay- 
ment of  the  public  debt  about  twelve  millions  yearly. 
The  amount  of  debt  becoming  due  or  payable  during 
the  next  five  years  was  $48,522,869.  The  surplus,  after 
paying  this  indebtedness,  would  be  twelve  millions. 
The  Secretary  did  not  favor  a  sudden  change  in  the 
tariff,  bnt  recommended  such  gradual  changes  as  would 
reduce  the  revenues  to  correspond  with  the  existing  ex- 
penditnre. 

President  Jackson,  in  his  message  to  Congress  in 
1829,  said  :  "  After  the  extinction  of  the  public  debt,  it 
is  not  probable  that  any  adjustment  of  the  tariff,  npon 
principles  satisfactory  to  the  people  of  the  Union, 
will,  vmtil  a  remote  period,  if  ever,  leave  the  Govern- 
ment without  a  considerable  surplus  in  the  treasury  be- 
yond what  may  be  required  for  its  current  service.  As, 
then,  the  period  approaches  when  the  application  of  the 
revenue  to  the  payment  of  debt  will  cease,  the  disposi- 
tion of  the  surplus  will  present  a  subject  for  the  serious 
deliberation  of  Congress,  and  it  may  be  fortunate  for 
the  country  that  it  is  yet  to  be  decided.     Considered  in 


JACA'SOS  FAVORS  DISTRIBUTION  IN  1829.      1G9 

connection  with  the  difficulties  which  have  lieretofore 
attended  appropriations  for  purposes  of  internal  im- 
provement, and  with  those  which  this  experience  tells 
lis  will  certainljarise  whenever  power  over  such  subjects 
may  be  exercised  by  the  general  Government,  it  is  hoped 
that  it  may  lead  to  the  adoption  of  some  plan  which  will 
reconcile  the  diversified  interests  of  the  States,  and 
strengthen  the  bonds  which  unite  them.  Every  mem- 
ber of  the  Union,  in  peace  and  in  war,  will  be  benefited 
by  the  improvement  of  inland  navigation  and  the  con- 
struction of  highways  in  the  several  States.  Let  ns, 
then,  endeavor  to  attain  this  benefit  in  a  mode  which 
will  be  satisfactory  to  all.  That  hitherto  adopted  has, 
by  many  of  our  fellow-citizens,  been  deprecated  as  an 
infraction  of  the  Constitution,  while  by  others  it  has 
been  viewed  as  inexpedient.  All  feel  that  it  has  been 
employed  at  the  expense  of  harmony  in  the  legislative 
councils.  To  avoid  these  evils,  it  appears  to  me  that 
the  most  safe,  just,  and  federal  disj)osirioii  which  could  be 
made  of  the  surplus  revenue,  would  be  its  ajiportionment 
among  the  several  States  according  to  their  ratio  of  rep- 
resentation ;  and  should  this  measure  not  be  found  war- 
ranted by  the  Constitution,  that  it  would  be  exjiedient  to 
propose  to  the  States  an  amendment  authorizing  it.  I 
regard  an  appeal  to  the  source  of  power,  in  cases  of  real 
doubt,  and  where  its  exercise  is  deemed  indispensable  to 
the  general  welfare,  as  among  the  most  sacred  of  all  our 
obligations." 

It  thus  appears  that  President  Jackson  regarded  as 
unconstitutional    the    appropriation    of   money   for   in- 
ternal   improvements    by    Congress,    and,    in    view   of 
the  anticipated  surplus,  suggested  that  its  distribution 
8 


170  UNITED  STATES  NOTES. 

among  the  States  will  enable  tliem  to  make  such  im- 
provements without  the  assistance  of  Congress.  lie  in- 
timated that  such  a  distribution  would  be  constitutional, 
but  if  there  was  any  doubt  on  this  point,  an  amendment 
would  remove  the  difficult}'.  During  the  session  of  Con- 
gress of  1829-30,  the  duties  on  tea,  coffee,  cocoa,  salt, 
and  also  on  tonnage,  were  reduced,  but  the  reductions 
were  not  sufficient  to  exhaust  the  surplus  after  the  debt 
then  maturing  should  be  paid. 

In  his  message  for  December,  1830,  President  Jack- 
son referi-ed  to  this  subject  as  follows :  "  In  my  first 
message  I  stated  it  to  be  my  opinion  that  it  is  not  prob- 
able that  any  adjustment  of  the  tariff,  upon  principles 
satisfactory  to  the  people  of  the  Union,  will,  until  a  re- 
mote period,  if  ever,  leave  the  Govermnent  without  a 
considerable  surplus  in  the  treasury  beyond  what  may 
be  required  for  its  current  services.  I  have  had  no 
cause  to  change  this  opinion,  but  much  to  confirm  it." 
The  Secretary  of  the  Treasury',  in  his  report  for  1832, 
says:  "After  January  1,  1833,  no  part  of  the  public 
debt,  except  the  remaining  fragments  of  the  unfunded 
debt,  of  which  only  small  portions  are  occasionally  pre^ 
sented,  will  be  redeemable  before  the  following  year ; 
and,  though  there  will  be  in  the  treasnry  during  the 
year  ample  means  to  discharge  the  whole  debt,  they  can 
be  applied  only  to  the  purchase  of  stock  at  the  market 
prices." 

The  whole  public  debt  was  virtually  extinguished  by 
January  1,  1835,  on  which  date  the  balance  of  available 
funds  in  the  treasury  was  85,586,232.  It  was  estimated 
that  for  the  year  1835  the  receipts  from  all  sonrces 
would   be    twenty   millions ;    the   actual  receipts   wero 


WOODBURY  OPPOSES  DISTRIBUTION.  Ill 

$35,430,087,  the  receipts  from  the  sale  of  the  public 
liuids  during  that  year  having  gi-eatly  increased.  In 
183-i  these  receipts  were  only  $4,857,600,  but  in  1835 
they  were  $14,757,000.  The  receipts  from  the  sales  of 
public  lands  in  1834-5-6  were  $44,492,381,  and  the 
total  receipts  from  this  source,  from  1796  to  1834,  were 
but  $44,595,000.  The  balance  left  in  the  treasury  at 
the  beginning  of  the  year  1833  was  $2,011,777  ;  in 
1834,  $11,702,905;  in  1835,  $8,892,858,  and  on  Janu- 
ary 1,  1836,  $26,749,803.  In  view  of  this  large  balance, 
and  its  probable  large  increase  by  January  1, 1837,  the  act 
of  June  23,  1836,  was  passed,  authorizing  the  distribu- 
tion of  the  surplus  among  the  States. 

As  has  been  seen,  this  method  of  disposing  of  the  sur- 
plus was  favorably  suggested  by  President  Jackson  in  his 
message  for  1829,  and  again  indorsed  by  him  in  his 
message  for  1830.  In  1836,  however,  the  views  of  the 
President  appear  to  have  changed.  Secretary  Wood- 
bury, in  his  report  for  1835,  disapproved  of  the  distri- 
bution of  the  sui'plus  among  the  States,  intimating  that 
it  was  unconstitutional.  He  said :  "  The  people  them- 
selves, it  is  believed,  can  best  manage  all  their  own 
money  which  they  and  their  representatives  think  may 
not  be  wanted  for  public  purposes ;  and  it  would  seem 
to  be  far  preferable  to  leave  it  originally  in  their 
possession,  than  to  withdraw  it  for  the  expensive 
operation  of  returning  it  substantially  to  the  place 
whence  it  came,  and  that  probably  in  a  manner  not 
conformable  to  the  Constitution,  till  after  the  delay 
of  procuring  an  amendment  to  it ;  and  even  then  not 
expedient,  because  calculated  injudiciously  to  strengthen 
the  general  Government,  and  to  render  the  States  more 


1(2  UNITED  STATES  NOTES. 

dopemlent  on  a  great  central  power  for  yearly  and  im- 
portant resources.  Indeed,  a  reduction  in  the  price  of 
public  lands,  whose  unusually  lai'ge  sales  the  past  year 
are  the  source  of  most  of  the  present  surplus,  would,  if 
their  sales  should  not  thereby  be  much  increased,  seem 
another  mode  far  more  natural  to  obviate  the  present 
difficulty.  But,  before  adopting  it,  this  and  various 
other  considerations  must  be  weighed,  and  it  must  be 
fully  considered  wliether  all  the  revenue  anticipated 
from  them  at  their  present  prices  would  not  be  neces- 
sary, after  the  great  reductions  in  the  tariff  in  18^2,  and 
W'hether  a  resort  to  a  higher  tariff  would  not  then  be- 
come indispensable,  if  the  average  receipts  from  lands 
or  customs  should,  from  any  new  legislation,  become 
then  nnich  diminished  below  the  estimates  which  Lave 
been  submitted  on  the  present  occasion." 

This  change  of  opinion  of  the  Administration  from 
1829  to  1836  was  probably  owing  to  the  hostility  of 
the  President  to  the  Bank  of  the  United  States,  result- 
ing in  the  veto  of  the  bill  for  renewal  of  its  charter 
on  July  10,  1832,  and  the  removal  of  the  United 
States  deposits  from  the  bank  hy  order  of  the  Secre- 
tary of  the  Treasury  of  September  26,  1833.  In  1835 
and  1836  the  revenues  of  the  Government  were  de- 
posited with  the  State  banks,  the  favorites  of  the  Ad- 
ministration, and  the  distribution  of  the  surplus  at  this 
time  among  the  States  would  have  deprived  these  banks 
of  the  deposits.  In  his  message  to  Congress  of  1836, 
after  the  passage  of  the  act  of  June  of  that  year,  regulat- 
ing the  public  deposits,  and  providing  at  the  same  time 
for  the  distribution  of  the  surplus  in  the  treasury  on 
January  1,  1837,  President  Jackson  said :  "  Without  de- 


JACKSON  OPPOSES  DISTRIBUTION  IN  1836.       173 

siring  to  conceal  that  the  experience  and  observation  of 
tlie  last  two  years  have  operated  a  partial  change  in  my 
views  upon  this  interesting  subject,  it  is  nevertheless  re- 
gretted that  the  suggestions  made  by  me  in  my  annual 
message  of  1829  and  1830  have  been  greatly  misunder- 
stood. At  that  time  the  great  struggle  was  begun 
against  that  latitudinarian  construction  of  the  Constitu- 
tion which  authorizes  the  unlimited  appropriation  of 
the  revenues  of  the  Union  to  internal  improvements 
within  the  States,  tending  to  invest  in  the  hands,  and 
place  under  the  control,  of  the  general  Government  all 
the  principal  roads  and  canals  of  the  country,  in  violation 
of  State  rights  and  in  derogation  of  State  authority. 
At  the  same  time  the  condition  of  the  manufacturing; 
interest  was  such  as  to  create  an  apprehension  that 
the  duties  on  imports  could  not,  without  extensive  mis- 
chief, be  reduced  in  season  to  prevent  the  accunmlation 
of  a  considerable  surplus  after  the  payment  of  the  na- 
tional debt.  In  view  of  the  dangers  of  such  a  surplus, 
and  in  preference  to  its  application  to  internal  improve- 
ments, in  derogation  of  the  rights  and  powers  of  the 
States,  the  suggestion  of  an  amendment  of  the  Consti- 
tution to  authorize  its  distribution  was  made.  It  was 
an  alternative  for  what  was  deemed  greater  evils — a 
temporary  resort  to  relieve  an  overburdened  treasury 
until  the  Government  could,  without  a  sudden  and  de- 
structive revulsion  in  the  business  of  the  countiy,  grad- 
ually return  to  the  just  principle  of  raising  no  more 
revenue  from  the  people,  in  taxes,  than  is  necessary  for 
its  economical  support.  Even  that  alternative  was  not 
spoken  of  but  in  connection  with  an  amendment  of  the 
Constitution." 


174  UlTITED  STATES  NOTES 

In  the  nipfiiitinie  Jackson,  in  liis  attack  on  tlie  T?ank 
of  tlie  United  IStates,  liad  been  bitterly  opposed  by 
Clay,  Callionn,  Webster,  and  a  majority  of  both  Houses 
of  Congress,  hy  whom  many  of  his  acts  were  re- 
garded as  an  exercise  of  arbiti-ary  power.  In  his  lirst 
message  in  1829  he  recommended  that  the  Bunk  of 
the  United  States  should  not  be  rechartered.  In  Jan- 
uary, 1832,  the  bank's  memorial  for  recharter  was  pre- 
sented both  in  the  House  and  Senate,  and,  after  some  de- 
bate, the  bill  for  the  recharter  passed  both  Houses.  This 
bill  was  vetoed,  on  July  10th,  by  the  President,  and  the 
recharter  of  the  bank  was  made  one  of  the  issues  of  the 
campaign  of  1832.  Henry  Clay  was  defeated  and  Jack- 
son re-elected,  and  the  latter  claimed  that  the  result  was 
an  indorsement  of  his  policy  against  the  bank. 

During  the  suuimer  of  1832,  Jackson,  as  a  measure  of 
hostility  against  the  bank,  conceived  the  project  of  the 
removal  of  the  United  States  deposits.  Benton,  in  his 
"  Thirty  Years'  View  "  (vol.  i.,  p.  377),  says :  "  General 
Jackson  was  not  the  man  to  tolerate  these  illegalities, 
corruptions,  and  indignities.  He  therefore  determined 
on  ceasing  to  use  the  institution  any  longer  as  a  place  of 
deposit  for  the  public  moneys  ;  and  accordingly  conmm- 
nicated  his  intention  to  the  Cabinet,  all  of  whom  had  been 
requested  to  assist  him  in  his  deliberations  on  the  sub- 
ject. The  major  part  of  them  dissented  from  his  design  ; 
whereupon  he  assembled  them  on  September  22d  and 
read  to  them  a  paper  containing  his  views  on  this  subject. 
This  paper  concludes  as  follows  :  '  Under  these  convic- 
tions he  feels  that  a  measure  so  important  to  the  iVmeri- 
can  people  cannot  be  commenced  too  soon  ;  and  he  there- 
fore names  the  first  day  of  October  next  as  a  period 


PUBLIC  MONEY  IN  THE  PET  BANKS.         175 

proper  for  tlie  change  of  the  deposits,  or  sooner,  pro- 
vided the  necessary  arrangements  with  the  State  banks 
can  be  made.' "  Secretary  Duane  refused  to  carry  out 
the  wishes  of  the  President  without  a  previous  refer- 
ence to  Congress.  Roger  B.  Taney,  tlien  Attorney- 
General,  was  made  Secretary  of  the  Treasury,  and 
issued  the  order  for  the  removal  of  the  deposits  on 
September  2G,  1833. 

The  opponents  of  the  Administration,  looking  at  the 
snrplus  revenue,  regarded  the  propositions  made  for  dis- 
tribution of  the  surplus  among  the  States  favorably,  as 
tending  to  deprive  the  President  of  a  portion  of  au 
immense  patronage.  The  deposit  of  the  public  money 
in  the  pet  banks  had  been  followed  by  great  financial 
distress,  continuing  during  the  year  1834  ;  and  previous 
to  and  during  that  year  propositions  were  frequently 
made  in  the  public  press  for  distribution  of  the  surplus 
revenue  among  the  States  as  a  measure  of  relief. 
These  propositions  were  first  in  the  form  of  a  distribu- 
tion of  the  revenue  from  public  land,  then  a  distribution 
of  the  public  lands  themselves,  and  finally  the  distribu- 
tion of  both  land  and  customs  revenues. 

During  the  session  of  1835,  on  motion  of  Mr.  Cal- 
houn, a  select  connnittee,  consisting  of  Calhoun,  Web- 
ster, Benton,  Bibb,  Southard,  and  King,  were  appoint- 
ed to  inquire  into  the  extent  of  executive  patronage, 
the  increase  of  public  expenditures,  and  the  number  of 
persons  employed  or  fed  by  the  executive  Government, 
The  connnittee  assumed  that  there  w^ould  be  an  annual 
surplus  of  nine  millions  for  the  next  eight  years.  It  re- 
garded the  disposal  of  this  surplus  as  a  problem  to  be 
solved  with  great  difficulty,  but  one  wdiich  was  import- 


170  UNITED  STATES  NOTES. 

nut  to  determine,  lest  the  Executive  should  greatly 
increase  his  power  by  depositing  the  public  funds  with 
the  favorite  banks.  The  committee  accordingly  "re- 
ported a  resolution  so  to  amend  the  Constitution  that 
the  money  remaining  in  the  treasury  at  the  end  of  each 
year,  till  January  1,  1843,  deducting  therefrom  the  sum 
of  §2,000,000  to  meet  current  and  contingent  expenses, 
shall  annually  be  distributed  among  the  States  and  Ter- 
ritories, including  the  District  of  Columbia;  and,  for 
that  purpose,  the  sum  to  be  distributed  to  be  divided 
into  as  many  shares  as  there  are  Senators  and  llepresent- 
atives  in  Congress,  adding  two  for  each  Territory  and 
two  for  the  District  of  Columbia ;  and  that  there  shall 
be  allotted  to  each  State  a  number  of  shares  equal  to  its 
representation  in  both  Houses,  and  to  the  Territoi'ies, 
including  the  District  of  Columbia,  two  shares  each. 
Supposing  the  surplus  to  be  distributed  should  average 
isO,000,000  annually,  as  estimat"e<l,  it  would  give  to  each 
share  §30,405,  Avhich,  multiplied  by  the  number  of  Sen- 
ators and  Itepresentatives  fi'oni  a  State,  will  show  the 
amount  to  which  any  State  will  be  entitled.'" 

This  resolution  was  opposed  by  Benton,  who  repre- 
sented the  Administration  in  the  Senate.  He  argued 
that  the  customs  revenues  could  be  largely  reduced  by 
changes  in  their  methods  of  collection ;  that  the  reve- 
nues from  the  sale  of  land  could  be  made  to  disappear  by 
selling  these  lands  at  nominal  prices  to  the  people.  If, 
after  this,  there  should  still  be  a  surplus,  he  advocated  its 
use  in  the  construction  of  fortifications  to  protect  tlie 
coasts  and  frontiers  of  the  country.  The  proposition  of 
the  committee  to  amend  the  Constitution  to  authorize 
the  distribution  was  never  brouu'ht  to  a  vote. 


DEPOSIT  OF  SURPLUS   WITH  THE  STATES.      177 

In  the  spring  of  1836  the  following  paragraph  ap- 
peared in  the  Philadelphia  National  Gazette:  "The 
great  loss  of  the  bank  has  been  in  the  depreciation  of 
the  securities,  and  the  only  way  to  regain  a  capital 
is  to  restore  their  vahie.  A  large  portion  of  them 
consists  of  State  stocks,  which  are  so  far  below  their 
intrinsic  worth  that  the  present  prices  conld  not  have 
been  anticipated  by  any  reasonable  man.  Ko  doubt 
can  be  entertained  of  their  ultimate  payment.  The 
States  themselves,  unaided,  can  satisfy  every  claim 
against  them  ;  they  will  do  it  speedily  if  Congress  adopt 
the  measures  contemplated  for  their  relief.  A  division 
of  the  public  lands  among  the  States,  which  would  en- 
able them  all  to  pay  their  debts,  or  a  pledge  of  the  pro- 
ceeds of  sales  for  that  purpose,  Avould  be  abundant  secur- 
ity. Either  of  these  acts  would  inspire  confidence  and 
enhance  the  value  of  all  kinds  of  property."  A  bill  for 
the  distribution  of  the  revenues  was  introduced  in  the 
Senate,  and  supported  both  by  Mr.  Clay  and  Mr.  Web- 
ster. It  was  opposed  by  Mr.  Benton,  who  introduced 
an  antagonistic  bill  devoting  the  surplus  revenues  to 
public  defences.  The  bill  passed  the  Senate  by  a  vote 
of  25  to  20. 

Being  sent  to  the  House  for  concurrence,  it  became 
evident  that  it  could  not  pass  that  body,  as  a  majority 
of  its  members  regarded  the  project  in  its  form  of  a 
distribution  as  unconstitutional.  The  friends  of  the 
measure  in  the  Senate  determined  to  change  its  form  so 
as  to  remove  the  difficulty.  Instead  of  a  disti-ibution  it 
was  to  be  a  deposit,  and  the  faith  of  the  States  was  to 
be  pledged  to  the  return  of  the  money.  There  was  an- 
other bill  in  the  Senate  for  regulating  the  deposit  of 


178  UNITED  STATES  NOTES. 

public  moneys  with  the  State  hanks,  and  the  proposi- 
tion in  the  form  of  a  de])Osit  with  tlie  States  became 
sections  thirteen  and  fourteen  of  this  bill,  which  passed 
with  oidy  six  dissenting  votes.  It  passed  the  House  bj' 
a  Large  majority,  155  to  3S.  In  the  form  of  distribution 
it  had  no  chance  of  passing  the  House.  "  It  was  ap- 
proved by  the  President,"  Benton  says,  "but  with  a  re- 
pugnance of  feeling  and  a  recoil  of  judgment  which  it 
required  great  effort  of  friends  to  overcome."  Probably, 
if  he  had  returned  it  with  his  veto,  it  would  have  had 
two-thirds  of  each  House  in  its  favor. 

The  following  is  a  copy  of  the  thirteenth  and  fourteenth 
sections  of  the  act  of  June  23, 1836  :  "  An  act  to  regulate 
the  deposits  of  the  public  money."  "•  Section  13.  That  the 
money  which  shall  be  in  the  treasury  of  the  United  States 
on  the  first  day  of  January',  eighteen  Imndred  and  thirty- 
seven,  reserving  the  sum  of  five  millions  of  dollars,  shall 
be  deposited  with  such  of  the  several  States,  in  propor- 
tion to  their  respective  representation  in  the  Senate  and 
House  of  Pepresentatives  of  the  United  States,  as  shall, 
by  law,  authorize  their  Treasurers,  or  other  competent 
authorities,  to  receive  the  same  on  the  terms  hereinafter 
sj^ecified  ;  and  the  Secretary  of  the  Treasury  shall  deliver 
the  same  to  such  Tj-easnrers,  or  other  competent  authori- 
ties, on  receiving  certificates  of  deposit  therefor,  signed 
by  such  competent  authorities,  in  such  form  as  may  be 
prescribed  by  the  Secretary  aforesaid  ;  which  certificates 
shall  express  the  usual  and  legal  obligations,  and  pledge 
the  faith  of  the  State  for  the  safe-keeping  and  repayment 
thereof,  and  shall  pledge  the  faith  of  the  States  receiv- 
ing the  same,  to  pay  the  said  moneys,  and  every  part 
thereof,  from  time  to  time,  whenever  the  same  shall  be 


THE  ACT  AS  PASSED.  179 

required  by  the  Secretary  of  tlie  Treasiny,  for  the  pur- 
pose of  defraying  any  \vants  of  the  public  treasury,  be- 
yond the  amount  of  the  five  millions  aforesaid :  Provided, 
that  if  any  State  declines  to  receive  its  proportion  of  the 
surplus  aforesaid,  on  the  terms  before  named,  the  same 
shall  be  deposited  with  the  other  States,  agreeing  to  ac- 
cept the  same  on  deposit  in  the  proportion  aforesaid  : 
And jyroinded,  fu7'tJie)\  that  when  said  money,  or  any 
part  thereof,  shall  be  wanted  by  the  said  Secretary,  to 
meet  appropriations  by  law,  the  same  shall  be  called  for 
in  ratable  proportions,  within  one  year,  as  nearly  as  con- 
veniently may  be,  from  the  different  States  with  Avhich 
the  same  is  deposited,  and  shall  not  be  called  for,  in 
sums  exceeding  ten  thousand  dollars,  from  any  one 
State,  in  any  one  month,  without  pi-evious  notice  of 
thirty  days  for  every  additional  sum  of  twenty  thousand 
dollars  which  may  at  awy  time  be  required.  Section  14. 
And  he  it  further  enacted,  That  the  said  deposits  shall 
be  made  with  the  said  States  in  the  following  propor- 
tions and  at  the  following  times,  to  wit :  one-quarter 
part  on  the  first  day  of  January,  eighteen  hundred  and 
thirty-seven,  or  as  soon  thereafter  as  may  be ;  one-quar- 
ter part  on  the  first  day  of  April,  one-quarter  part  on 
the  first  day  of  July,  and  one-quai'ter  part  on  the  first 
day  of  October,  all  in  the  same  yeai-." 

In  his  message  for  December,  1836,  President  Jack- 
son objected  to  the  method  of  distribution  provided 
in  the  law,  viz.,  according  to  representation,  and  ad- 
vocated a  method  founded  on  the  population  of  each 
State. 

On  January  1,  1S37,  the  surplus  in  the  treasury,  after 
reserving  the  five  millions  required  by  law,  was  $37,- 


ISO 


UNITED  STATES  NOTES. 


408,850.07,  and    the  apportiomneiit  amoncj  the  several 
States  is  sliowii  by  the  following  table : 


Maine 

New  Hamijsliire 
Massiiclnisetts . . 
Eliode  Island  . . 

Vermont 

Connecticut. . . . 

New  York 

New  Jersey  . . . . 
Pennsylvania .  .  . 

Delaware 

INIaryland 

Yirgiuia  

North  Carolina  . 
Bontli  Carolina  . 

Georgia 

Alabama 

Mississippi  . .  . . 

Louisiana 

Missouri 

Kentucky 

Tennessee  

Ohio 

Indiana 

Illinois 

Arkansas  

Michigan 

Total 


Number        .  ,.  ^    -^ 

of  dec-        Amount  to  be 

toral  deposited  during 
votes.  the  year  18.i7. 


10 

7 

14 

4 

7 

8 

42 

8 

30 

3 

10 

23 

15 

11 

11 

7 

4 

5 

4 

15 

15 

21 

9 

5 

3 

3 


§1,274,451.02 

892,115.71 

1,784,231.43 

509,780.41 

892,115.71 

1,019,560.81 

5,352,694.28 

1,019,560.81 

3,823,353.06 

382,335.31 

1,274,451.02 

2,931,237.34 

1,911,676.53 

1,401,896.12 

1,401,896.12 

892,115.71 

509,780.41 

637,225.51 

509,780.41 

1,911,676.53 

1,911,676.53 

2,676,347.14 

1,147,005.92 

637,225.51 

382,335.31 

382,335.31 


First 
instalment. 


§318,612.75 
223,028 .  93 
446,057.86 
127,445.10 
223,028.93 
254,890.20 
1,338,173.57 
254,890.20 
955,838.26 
95,583.88 
318,612.75 
732,809.03 
477,919.13 
350,474.03 
350,474.03 
223,028.93 
127,445.10 
159,306.38 
127,445.10 
477,919.13 
477,919.13 
669,086.78 
286,751.48 
159,306.38 
95,583.83 
95,583.83 


§37,468,859 .  97  §9,367,214. 98 


The  above  table,  with  the  exception  of  the  last  column, 
is  copied  from  the  report  of  Mr.  Woodbury  to  Con- 
gress, of  January  3,  1837.  It  will  be  noticed  that 
by  the  law  authorizing  the  deposit  of  the  surplus, 
each  State  was  requked  to  authorize  its  Treasurer  by 


FIRST  THREE  INSTALMENTS  PAID.  181 

law  to  receive  the  deposit  and  to  give  certificates  of 
deposit  therefor.  The  necessary  forms  for  carrying  ont 
this  plan  were  prepared  by  the  Sccrctai-y  of  the  Treas- 
ury, and  may  be  found  in  Ex.  Doc.  and  Reports  of 
Committees,  1st  Sess.  25th  Congress,  Doc.  No.  30.  All 
of  the  States  named  in  the  foregoing  table  of  apportion- 
ment passed  laws  authorizing  the  receipt  of  the  deposit, 
and  some  took  the  opportunity  of  instructing  their  rep- 
resentatives to  protest  against,  or  to  endeavor  to  obtain 
changes  in,  some  of  the  features  of  the  law. 

The  Legislature  of  the  State  of  I^ew  Hampshire,  by 
resolution,  declared  that  any  distribution  of  surplus  was 
imconstitutional.  They  instructed  their  delegates  to 
vote  for  a  reduction  of  revenue  and  against  any  measure 
for  relinquishment,  by  the  United  States,  of  the  sunison 
deposit  with  the  States.  The  Legislature  of  the  State  of 
Indiana  requested  its  Senators  and  Representatives  to 
use  their  exertions  to  procure  the  passage  of  an  act  of 
Congress  for  the  relinquishment,  on  the  part  of  the 
United  States,  of  all  claims  of  surplus  revenue  deposits 
under  act  of  June  23,  1836.  These  resolutions  show 
conclusively  that  these  States  regarded  the  monej'  re- 
ceived as  a  deposit  to  be  likely  to  be  recalled,  and  not  as 
a  gift. 

The  first  three  instalments  w^ere  paid  to  the  States 
as  nearly  as  possible  on  the  following  dates,  viz. :  one- 
fourth  on  January  1,  1837,  one-fourth  on  April  1st,  and 
one-fourth  on  July  1st,  following.  The  sums  were  paid 
by  transfers  from  the  deposit  banks.  On  November  1, 
1836,  the  Secretary  of  the  Treasury  notified  the  banks  of 
the  requisition  which  would  be  made  upon  them  to  meet 
the  instalments  due  to  the  several  States  on  January 


182 


UNITED  STATES  NOTES. 


1st.  On  Febniarj  18,  1837,  lie  gave  similar  notification 
in  reference  to  the  next  three  instalments.  Forms  of 
the  letters  sent  to  each  of  the  deposit  banks  are  given, 
also,  in  Document  30,  September  26,  1837,  before  re- 
ferred to.  The  instalments  payable  on  January  1st, 
April  1st,  and  July  1st,  were  transferred  to  the  States 
on  or  near  those  dates.  Tliey  amounted  in  all  to 
$28,101,645,  and  proportionate  amounts  were  deposited 
with  and  receipted  for  by  each  State. 

In  May,  1837,  the  financial  pressure  became  so  great 
that  the  banks  generally  suspended  specie  payments. 
The  fifth  section  of  the  act  of  June  23,  1836,  for  regu- 
lating the  deposits  of  public  money,  provided  that  no 
bank  shall  be  selected  or  continued  as  a  place  of  deposit 
of  public  money  wdiich  shall  not  redeem  its  notes  and 
bills  on  demand  in  specie.  On  May  1,  1837,  the  num- 
ber of  the  deposit  banks  was  eighty-eight,  distributed 
by  States  as  follows : 


Maine 8 

New  Hampshire 4 

Vermont 2 

Massaclmsetts 6 

Connecticut 3 

Rhode  Island 2 

New  York 16 

New  Jersey 3 

Pennsylvania 3 

Delaware 2 

Maryland 2 

District  of  Cohimbia 1 

Virginia 3 


North  Carolina 1 

South  Carolina 3 

Georgia 3 

Alabama 1 

Mississippi 2 

Louisiana 2 

Tennessee * , .  2 

Kentucky 7 

Ohio 9 

Indiana 1 

Illinois 1 

Michigan 2 

Total 88 


The  number  of  deposit  banks  on  Xovember  1,  1830,  was 
eighty-nine.  Their  capital  was  $77,576,449;  United  States 


VAN'  BUREN  CALLS  AN  EXTRA  SESSION.      IS  J 

deposits,  $49,377,980  ;  other  deposits,  only  $26,573,479.' 
The  difficulties  arising  from  the  necessity  of  discontinu- 
ing as  public  depositories  those  banks  which  refused  to 
pay  specie,  made  it  apparent  that  it  would  be  very  in- 
convenient, if  not  impossible,  to  transfer  the  fourth  in- 
stalment of  the  deposit  with  the  States. 

Further  legislation  was  deemed  necessary  in  this  emer- 
gency, and  an  extra  session  of  Congress  was  called  by 
President  Van  Buren.  Congress  met  on  September  4th. 
Among  other  reasons  for  the  extra  session,  the  President 
in  his  message  mentioned  that  "  questions  were  also  ex- 
pected to  arise  in  the  recess  in  respect  to  the  October 
instalment  of  those  deposits,  requiring  the  interposition 
of  Congress."  Secretary  Woodbury,  in  a  report  made  on 
the  safe-keeping  of  the  public  moneys,  on  September 
23d,  in  answer  to  a  resolution  of  the  House  of  Representa- 
tives, said  :  "This  last  mode  [viz.,  deposit  with  selected 
State  banks]  ceased  by  operation  of  law  during  the  last 
spring,  except  in  relation  to  live  or  six  deposit  banks 
which  have  continued  to  redeem  their  notes  in  specie. 
The  direct  losses  sustained  under  it  appear  to  be  large. 
But,  in  the  end,  they  are  not  considered  likely  to 
amount  to  anything,  though  the  disappointments,  de- 
lays, and  injuries  under  it  must,  it  is  manifest,  in  sev- 
eral cases  be  great.  The  indirect  losses  to  the  public 
creditors  and  contractors  have  been  considerable,  and 
are  difficult  to  be  computed."  From  this  it  will  be  seen 
that  only  six  out  of  the  eighty-eight  banks  designated 
as  public  depositories  on  May  1st  could  bo  used  as  such 
in  September. 

'  For  Btatemeiit  of  resources  and  liabilities  of  tliese  banks,  see  Re- 
port of  Comptroller  of  the  Currency',  p.  43.     187G. 


IS-i  UNITED  STATES  NOTES. 

Betiton  sajs,  in  relation  to  tliese  payments:  "Tlio 
deposit  with  the  States  had  only  readied  its  second 
instahnent  when  the  deposit  banks,  unable  to  stand  a 
continned  qnarterly  strain  of  near  ten  millions  to  the 
qnarter,  gave  np  the  effort,  and  closed  their  doors. 
The  first  instalment  had  been  delivered  on  January  1st, 
in  specie  or  its  equivalent ;  the  second  in  Apiil,  also  in 
valid  money  ;  the  third  one,  demandable  on  July  1st,  was 
accepted  by  the  States  in  depreciated  paper ;  and  they 
were  very  willing  to  receive  the  fourth  instalment  in 
the  same  way.  The  Secretarj^'s  report  shows  that  there 
would  be  a  deficiency  in  the  revenues  to  meet  expendi- 
tures of  over  ten  millions  of  dollars,  which  would  render 
it  necessary  either  to  recall  some  of  the  money  deposited 
with  the  States,  or  to  postpone  the  payment  of  the  fourth 
instalment  due  on  October  1st.  The  Secretary  men- 
tioned the  inconvenience  of  paying  the  fourth  instal- 
ment, arising  from  the  difiiculty  of  transferring  from  the 
West  and  Southwest,  where  the  money  received  from 
sales  of  public  lands  had  accumulated.  The  lack  of  rev^- 
enue  was  his  principal  reason  for  urging  the  withholding 
or  postponement  of  the  fourth  instalment.  Believing  the 
money  w^ould  be  immediately  necessary  to  the  Govern- 
ment, he  thought  it  would  be  less  inconvenient  to  with- 
hold payment  than  to  pay  and  immediately  recall." 

On  September  11,  1837,  Mr.  Silas  Wright,  from  the 
Senate  Committee  on  Finance,  reported  a  bill  which  pro- 
vided "  that  the  transfer  of  the  fourth  instalment  of  de- 
posits directed  to  be  made  with  the  States,  under  the 
thirteenth  section  of  the  act  of  June  23,  1836,  be  and 
the  same  is  hereby  postponed  until  further  provision  by 
law."     The  bill  was  brought  up  for  consideration  on  the 


DEBATE  IN  THE  SENATE.  1S5 

1-itl),  wlien  lie  said  tliat,  according  to  tlie  report  of  tlie 
Secretary  of  tlie  Treasurj  of  the  28tli  iilt.,  tliei'e  was  then 
in  the  treasury  subject  to  draft,  avaihible  and  unavail- 
able, but  $8,100,000.  If  the  expenses  of  the  month  of 
September  were  deducted,  which  were  estimated  at  two 
and  a  half  millions,  there  would  be  in  the  treasury,  sub- 
ject to  draft  on  October  1st,  less  than  six  millions,  with- 
out the  transfer  of  a  dollar  to  the  States  toward  the  Oc- 
tober instalment.  If  the  October  instalment  was  to  be 
transferred  to  the  States,  all  the  means  in  the  treasury 
on  the  day  when  that  instalment  was  made  transferable 
would  not  be  equal  to  two-thirds  of  the  amount,  and 
money  must  be  borrowed  upon  the  credit  of  the  United 
States  to  supply  the  deficiency.  The  largest  portion  of 
the  funds  in  the  treasury  was  wholly  unavailable  ;  they 
were  in  the  Western  and  Southwestern  banlcs,  and  expe- 
rience had  already  shown  that  the  drafts  of  tl.e  Treas- 
urer upon  these  banks  would  not  be  received  in  payment 
by  the  public  creditors,  neither  would  the  States  other 
than  those  in  which  the  banks  were  located  take  these 
drafts,  and  give  their  obligations  for  a  repayment  of  the 
amount  in  money  in  pursuance  of  the  provisions  of  the 
deposit  law.  The  transfer  to  the  States,  therefore,  could 
not  be  made,  even  to  the  amount  of  the  funds  in  the 
treasury  subject  to  draft,  by  reason  of  the  character  of 
the  funds  to  be  drawn  upon. 

The  whole  means  in  the  treasury  on  the  first  day  of 
October  next  would  be  from  three  and  a  half  to  four 
millions  less  than  the  transfer  required.  If  Congress 
should  insist  upon  this  transfer,  it  must  authorize  a  loan 
of  money  upon  the  public  credit  in  order  that  that 
money,  when  loaned,  may  be  deposited  with  the  States 


ISO  UNITED  STATES  NOTES. 

for  safe-keeping.  Mr.  Webster  thoufrht  that  it  was  a 
mere  question  of  convenience,  the  distributed  money 
would  go  to  all  the  people,  and  any  deficiency  in  the 
treasury  must  be  supplied  by  all  the  people.  lie 
thought  the  most  convenient  way  was  to  pay  the  instal- 
ment, and  provide  for  the  necessities  of  the  treasury  by 
other  means.  Mr.  Preston  opposed  the  bill  on  the 
ground  that  many  States  had  already  appropriated  the 
money,  and  had  undertaken  public  works  on  the  strength 
of  it,  etc.  Mr.  Crittenden,  of  Kentucky,  opposed  it  on 
the  same  ground.  By  other  Senators  the  deposit  act 
was  treated  as  a  contract  which  the  Uuited  States  M'as 
bound  to  carry  out. 

Mr.  Buchanan  proposed  an  amendment,  the  effect  of 
which  was  to  change  the  character  of  the  deposit  act 
and  make  it  a  distribution  measure.  By  the  act  it  was 
tlie  du.ty  of  the  Secretary  of  the  Treasur}"  to  call  for  a 
return  of  the  deposit  when  needed  by  the  Federal 
Treasury.  The  amendment  superseded  this,  and  enacted 
that  the  deposits  should  remain  until  called  for  by  Con- 
gress. Mr.  JSt^iles  pointed  out  the  eifect  of  this  amend- 
ment. He  said  the  majority  of  those  who  voted  for  the 
deposit  act  did  so  because  it  was  a  deposit  and  not  a 
distribution,  and  merely  withdrew  the  public  moneys 
from  the  banks  and  deposited  them  with  the  States. 
'  The  amendment  would  change  the  deposit  to  a  loan,  or, 
more  properly,  a  grant,  to  the  States.  Mr.  Buchanan's 
amendment,  however,  passed  by  a  vote  of  32  to  12,  and 
thus  the  recall  of  the  deposits  already  made  was  taken 
from  the  hands  of  the  States  and  placed  with  Congress. 

In  the  House  of  Representatives  the  disposition  to  re- 
gard the  deposit  act  as  a  contract  was  even  stronger  than 


DEBATE  IN    THE  HOUSE.  187 

in  tlie  Senate.  Mr.  Caleb  Gushing  argued  that  it  had 
all  the  features  of  a  contract,  that  it  was  a  "  contract  of 
deposit."  It  was  a  contract  in  lionor,  and,  as  far  as 
there  could  be  a  contract  between  the  United  States  and 
the  States,  a  contract  in  law. 

On  the  other  hand,  it  was  argued  very  forcibly  that 
neither  in  honor  nor  in  law  was  there  any  reason  for 
paying  the  fourth  instalment  M'hen  there  was  no  surplus 
in  the  treasury.  Mr.  Halsted,  on  the  same  side,  said : 
"In  reference  to  the  deposit  act,  if  a  contract,  it  was  a 
contract  based  alone  upon  the  distribution  of  an  existing 
surplus,  not  wanted  for  the  ordinary  or  extraordinary 
expenditures  of  the  Government.  The  sti-ucture  was 
reared  upon  that  rock,  and  was  so  understood  at  the 
time  the  statute  was  enacted.  The  money  to  be  dis- 
tributed M^as  out  of  a  surplus  fund.  Where  was  there 
a  surplus  fund  ?     There  was  none." 

The  opponents  of  the  bill,  apart  from  the  argument 
of  contract,  mainly  founded  their  arguments  on  the  fact 
that  the  States  had  been  induced  to  undertake  public 
works  and  other  engagements  by  the  promise  of  the 
money,  and  the  inconvenience  to  which  they  would  be 
put  by  withholding  the  fourth  instalment.  It  was  justly 
observed  by  their  opponents  that  the  States  should  have 
regulated  their  action  by  tlie  actual  terms  of  the  law  of 
Gongress,  to  which  they  agreed  when  they  accepted  the 
deposits.  The  opposition  to  the  bill  was  persistent,  the 
debate  was  long,  and  many  members  were  participants, 
among  whom  was  Adams,  of  Massachusetts,  Fillmore  and 
Sibley,  of  Kew  York,  Bell,  of  Tennessee,  and  Wise,  of 
Vii'ginia.  It  finally  passed  the  House  by  the  close  vote 
of  119  to  117.     A  motion  to  reconsider  was  made  by 


188  UNITED  STATES  NOTES. 

Mr.  Piclvcns,  and  carrieil.  On  reconsidei-ation,  Mr.  Pick, 
ens  niove<l  to  amend  so  that,  instead  of  postponing  the 
payment  indefinitely  until  further  action  by  Congi-e.ss, 
it  be  postponed  to  January  1,  1830,  a  day  certain.  This 
amendment  was  agreed  to  and  concurred  in  by  the  Sen- 
ate, and  the  bill  finally  passed  in  that  form. 

The  effect  of  the  postponement  of  the  payment  to  a 
fixed  day  has  been  held  by  some  to  bind  the  United 
States  to  such  a  payment;  and  the  making  the  with- 
drawal of  the  first  three  instalments  received  by  the 
States  dependent  on  an  act  of  Congress  has,  by  the 
same  kind  of  construction,  been  regarded  by  some  as 
altering  what  was  originally  a  deposit  to  a  gift. 

As  January  1,  1839,  approached,  it  became  apparent 
that  there  would  be  no  funds  in  the  treasury  available 
for  the  deposit  of  the  postponed  instalment.  The  Sec- 
retary of  the   Treasury,  in   his  report  for  December, 

1838,  stated  that  the   available  balance  on  January  1, 

1839,  would  be  $2,765,342  only,  and  at  the  date  of  the 
report  the  treasury  notes  outstanding  amounted  to  over 
$7,751:,560.  He  said  :  "  It  will  be  perceived  by  these 
statements  that  no  surplus  balance  will  probably  exist, 
either  on  January  1,  1839,  or  during  that  year,  to  be 
deposited  with  the  several  States  for  safe-keeping  as  a 
fourth  instalment  under  the  deposit  act  of  June  23, 
1836." 

Since  January  1,  1839,  there  has  never  been  a  time 
when  the  United  States  had  in  its  treasury  a  surplus 
over  and  above  all  its  debts  and  estimated  expenditures. 
The  amount  deposited  in  the  first  three  instalments  with 
the  States  has  always  been  carried  as  funds  of  the  treas- 
ury unavailable  ;  and  under  the  terms  of  the  acts  rela- 


LETTER   OF  SECRETARY  DIX.  tS9 

tivG  to  its  deposit,  it  coiild  now  be  recalled  at  any  time 
by  an  act  of  Congress. 

General  John  A.  Dix,  Seci-etary  of  the  Treasury, 
in  a  letter  to  the  Chairman  of  the  Committee  of  Ways 
and  Means,  of  January  18,  1861,  called  attention  to 
the  fact  that  "  there  ai'e  deposited  with  twenty-six  of 
the  States,  for  safe-keeping,  over  twenty-eight  mil- 
lions of  dollars  belonging  to  the  United  States,  for 
the  payment  of  which  the  promise  of  these  States  is 
pledged  by  written  instruments  on  file  in  this  depart- 
ment. The  annual  statement  of  receipts  and  expendi- 
tures for  the  year  ending  Juile  30,  1860,  represents  this 
amount  as  part  of  '  the  balance  in  the  treasury  '  on  that 
day.  ■""■  *  I  refer  to  this  final  I'esource  as  an  avail- 
able one,  should  the  public  exigencies  demand  it.  It  is 
not  doubted  that  the  greater  portion  of  the  amount  so 
deposited  would  be  promptly  and  cheerfully  paid  should 
an  exigency  arise  involving  the  public  honor  or  safety. 
If,  instead  of  calling  for  these  deposits,  it  should  be 
deemed  advisable  to  pledge  them  for  the  repayment  of 
any  money  the  Government  might  find  it  necessary  to 
borrow,  loans  contracted  on  such  a  basis  of  security,  su- 
peradding to  the  plighted  faith  of  the  United  States 
that  of  the  individual  States,  could  hardly  fail  to  be  ac- 
ceptable to  the  capitalists." 

It  is  easy  to  see  that  there  can  be  no  constitutional 
authority  for  the  claim  that  this  money,  already  in  the 
possession  of  the  States,  irrevocably  belongs  to  them, 
since,  according  to  the  Constitution,  it  is  still  in  the 
treasury  of  the  United  States.  The  only  method  of  tak- 
ing money  out  of  the  treasury  is  by  an  appropriation  by 
Congress,  upon  which  the  Secretary  of  the  Treasury  ia 


190  UNITED  STATES  NOTES. 

authorized  to  issue  liis  warraut,  and  no  such  method  was 
ever  adopted  in  relation  to  this  money.  The  whole  ob- 
ject and  intention  of  tlie  act  was  to  deposit  the  surplus, 
not  distribute  it,  as  it  has  been  seen  that  a  distribution 
act  was  known  at  the  time  to  be  unconstitutional.  Upon 
the  delivery  of  the  money  the  Treasurer  of  each  State 
gave  to  the  United  States,  not  a  receipt,  but  a  cei't^ficate 
of  deposit.,  subject  to  the  future  requisition  of  the  Gov- 
ernment. The  amount  of  the  deposit  has  always  been 
held  among  the  "unavailable  funds  of  the  treasury," 
and  is  annually  so  i-eported  among  other  like  funds,  as 
may  be  seen  by  reference  to  page  3S3,  Finance  Report, 
1882,  and  previous  reports.  But  whether  a  deposit  or  a 
distribution,  no  constitutional  method  has  been  taken  to 
authorize  the  payment  of  the  money  out  of  the  treasury. 
Moreover,  it  was  a  deposit  of  surplus  and  surplus  only, 
and  when  the  surplus  did  not  exist  was  suspended  by 
act  of  Congress  until  a  cei'tain  date  ;  and  when  at  that 
date  there  was  still  no  surplus,  the  deposit  was  again 
withheld  by  the  Executive,  and,  on  the  same  principle, 
has  been  withheld  ever  since.  Congress  at  any  time 
can  authorize  the  withdrawal  of  the  whole  amount  from 
the  States,  and  it  doubtless  could  authorize  the  perpet- 
ual withholding  of  the  fourth  instalment  in  view  of  the 
fact  that  at  some  time  in  the  future,  after  the  national 
debt  is  paid,  there  may  be  a  surplus  similar  to  that 
which  existed  January  1,  1877. 

Benton,  in  his  "  Tliirty  Years'  Yiew,"  tlius  refers  to 
the  use  made  of  the  deposits  by  the  different  States : 
"  All  sorts  of  plans  were  proposed  for  the  employment 
of  the  money  ;  and  combinations,  more  or  less  interested 
or  designing,  generally  carried  the  point  in  the  universal 


THE  SURPLUS  NOT  SQUANDERED.  191 

scramble.  In  some  States  a  pro  rata  division  of  the 
luonej  per  capita  was  made  ;  and  the  distribntive  share 
of  eacli  individual,  being  but  a  few  shillings,  was  re- 
ceived with  contempt  by  some,  and  rejected  with  scorn 
bj  others.  In  other  States  it  Avas  divided  among  the 
counties,  and  gave  rise  to  disjointed  undertakings  of  no 
general  benefit.  Others,  again,  were  stimulated,  by  the 
unexpected  acquisition  of  a  large  sum,  to  engage  in  large 
and  premature  works  of  internal  impi'ovement,  embar- 
rassing the  State  with  debt,  and  commencing  works 
which  could  not  be  finished." 

This  paragraph  conveys  a  wrong  impression.  It  is 
generally  believed  that  the  moneys  deposited  b}^  the 
Government  with  the  different  States  were,  for  the  most 
part,  wasted  or  employed  in  works  of  internal  improve- 
ment which  were  unnecessary.  The  data  for  a  full  in- 
vestigation of  this  subject  are  not  at  hand,  but  it  is 
known  that  the  States  of  Massachusetts,  Connecticut, 
]^ew  York,  New  Jersey,  Pennsylvania,  Delaware,  Mary- 
land, Is^orth  Carolina,  Illinois,  Indiana,  Kentucky,  Ohio, 
and  Missouri  appropriated  a  considerable  portion  of  the 
income  from  this  fund  to  the  support  of  public  schools ; 
and  that  in  some  of  these  States  the  income  from  the 
whole  fund  has  been  from  the  connnencement,  and  still 
is,  devoted  to  the  education  of  the  people.  In  some  in- 
stances the  States  used  the  funds  for  internal  improve- 
ments, but  provided  by  legislation  for  the  appropi-iation 
of  an  amount  equal  to  the  interest  for  the  support  of 
public  schools,  wdiich  was  similar  to  an  investment  in 
the  bonds  of  the  State. 

A  claim  has  been  made  within  a  few  months  (1SS4) 
upon  the  Secretary  of  the  Treasury,  under  authority  of 


192  UNITED  STATES  NOTES. 

an  act  passed  bj  the  Legislature  of  the  State  of  Vir- 
giiiia,  for  the  deposit  of  the  amount  of  the  fourtli  in- 
stalment (§732,809.33)  under  the  act  of  June  23,  1830. 
A  similar  claim  has  also  been  made  by  the  Treasurer  of 
the  State  of  Arkansas,  through  Senator  Garland,  of 
that  State,  to  which  the  Secretary  replied,  on  October 
8,  1883:  "I  find  that  the  tradition  of  this  department 
for  over  a  dozen  years  has  been  to  consider  that  act  as 
obsolete,  or  at  least  not  imperatively  effective  during  a 
season  of  large  public  federal  indebtedness.  I  can  for 
the  present  follow  in  the  path  of  my  predecessors  in  the 
office  of  the  Secretary  of  the  Treasury." 

A  petition  was  subsequently  made  to  the  Supreme 
Court  of  the  United  States,  by  the  State  of  Virginia, 
through  its  properly  authorized  agent,  for  a  writ  of 
mandamus  upon  the  Secretary  of  the  Treasury,  to  com- 
pel him  to  pay  to  that  State  the  amount  of  the  fourth 
instalment  of  surplus  alleged  to  be  due  under  the 
provisions  of  the  act  of  June  23,  1836.  The  court,  on 
March  17,  1884,  held  that  there  was  no  case  for  a  man- 
damus, and  that  the  Secretary  of  the  Treasury  has  no 
authority  under  existing  legislation,  and  without  further 
direction  from  Congress,  to  use  the  surplus  revenue  in 
the  treasury,  from  whatever  source  derived,  or  wlien- 
ever,  since  January  1,  1839,  it  may  have  accrued,  for 
the  purpose  of  making  the  fourth  instalment  of  deposit 
required  by  the  act  of  1836. 


APPENDIX. 


STIPEEIHE   COURT   OF   THE   UNITED   STATES. 

No.  9.— October  Term,  1883. 

Augustus  D.  JutLLiARD,  plaintiff  in  error,  vs.  Thomas  S. 
Greenman.  In  error  to  the  Circuit  Court  of  the  United  States 
for  the  Southern  District  of  New  York 

Congress  has  the  constitutional  power  to  make  the  treasury 
notes  of  the  United  States  a  legal  tender  in  payment  of  private 
debts  in  time  of  peace  as  well  as  in  time  of  war. 

Under  the  act  of  May  31,  1878,  chai^ter  146,  which  enacts 
that  notes  of  the  United  States  issued  during  the  war  of  the 
rebellion  under  acts  of  Congress  declaring  them  to  be  a  legal 
tender  in  payment  of  private  debts,  and  since  the  close  of  that 
■war  redeemed  and  paid  in  gold  coin  at  the  treasury,  shall  be 
reissued  and  kept  in  circulation,  notes  so  reissued  are  a  legal 
tender. 

[March  3,  1884.] 
Mr.  Justice  Gray  delivered  the  opinion  of  the  couri. 
Juilliard,  a  citizen  of  New  York,  brought  an  action  against 
Greenman,  a  citizen  of  Connecticut,  in  the  Circuit  Court  of  the 
United  States  for  the  Southern  District  of  New  York,  alleging 
that  the  i^laintiff  sold  and  delivered  to  the  defendant,  at  his 
special  instance  and  request,  one  hundred  bales  of  cotton,  of 
the  value  and  for  the  agreed  price  of  $5,122.90,  and  that  the 
defendant  agreed  to  jsay  that  sum  in  cash  on  the  delivei-y  of 
the  cotton,  and  had  not  paid  the  same,  or  any  jiart  thereof, 
except  that  he  had  paid  the  sum  of  $22.90  on  account,  and  was 
now  justly  indebted  to  the  plaintiff  therefor   in  the  sum  of 
d 


194  ArPENDIX. 

$5,100,  and  demantling  judgment  for  this  sum  witli  interest  and 
costs. 

The  defendant  in  his  answer  admitted  the  citizenship  of  the 
imrties,  the  purchase  and  delivery  of  the  cotton,  and  the  agree- 
mant  to  pay  therefor,  as  alleged ;  and  averred  that  after  the 
delivery  of  the  cotton  he  ofi'ered  and  tendered  to  the  plaintiff, 
in  full  payment,  ^22.50  in  gold  coin  of  the  United  States,  forty 
cents  in  silver  coin  of  the  United  States,  and  two  United  States 
notes,  one  of  the  denomination  of  if 5, 000  and  the  other  of  the 
denomination  of  $100,  of  the  description  known  as  United 
States  legal-tender  notes,  purporting  by  recital  thereon  to  be 
legal  tender,  at  their  respective  face  values,  for  all  debts,  public 
and  private,  except  duties  on  imports  and  interest  on  the 
public  debt,  and  which,  after  ha\dng  been  presented  for  jmy- 
ment,  and  redeemed  and  paid  in  gold  coin,  since  January  1, 
1879,  at  the  United  States  sub-Treasury  in  New  York,  had  been 
reissued  and  kept  in  circulation  under  and  in  pursuance  of 
the  act  of  Congress  of  May  31,  1878,  chapter  146 ;  that  at  the 
time  of  ofifering  and  tendering  these  notes  and  coin  to  the 
plaintiif  the  sum  of  $5,122.90  was  the  entire  amount  due  and 
owing  in  payment  for  the  cotton,  but  the  plaintiff  declined  to 
receive  the  notes  in  payment  of  S5, 100  thereof  ;  and  that  the 
defendant  had  ever  since  remained,  and  still  was,  ready  and 
willing  to  pay  to  the  plaintiff  the  sum  of  $5,100  in  these  notes, 
and  brought  these  notes  into  court,  ready  to  be  paid  to  the 
j)laiutiff  if  he  would  accept  them. 

The  plaintiff  demurred  to  the  answer  ui^on  the  grounds  that 
the  defence,  consisting  of  new  matter,  was  insufficient  in  law 
upon  its  face,  and  that  the  facts  stated  in  the  answer  did  not 
constitute  any  defence  to  the  cause  of  action  alleged. 

The  Circuit  Court  overruled  the  demurrer  and  gave  judgment 
for  the  defendant,  and  the  plaintiff  sued  out  his  writ  of  error. 

The  amount  which  the  plaintiff  seeks  to  recover,  and  which, 
if  the  tender  pleaded  is  insufficient  in  law,  he  is  entitled  to 
recover,  is  $5,100.  There  can,  therefore,  be  no  doubt  of  the 
jurisdiction  of  this  court  to  revise  the  judgment  of  the  Circuit 
Court  (act  of  February  16,  1875,  ch.  77,  sec.  3  ;  18  Stat.,  315). 


APPENDIX.  105 

The  notes  of  tlie  United  States,  tendered  in  payment  of  the 
defendant's  debt  to  the  plaintiH",  were  originally  issued  under 
the  acts  of  Congress  of  February  25,  1862,  ch.  33,  July  11,  1862, 
ch.  142,  and  March  3,  1863,  ch.  73,  passed  during  the  war  of 
the  rebellion,  and  enacting  that  these  notes  should  "  be  lawful 
money  and  a  legal  tender  in  payment  of  all  debts,  public  and 
l^rivate,  within  the  United  States,"  except  for  duties  on  imports 
and  interest  on  the  public  debt  (12  Stat.,  345,  532,  709). 

The  provisions  of  the  earlier  acts  of  Congress,  so  far  as  it  is 
necessary  for  the  understanding  of  the  recent  statutes  to  quote 
them,  are  re-enacted  in  the  following  provisions  of  the  Revised 
Statutes  : 

"Sec.  3579.  When  any  United  States  notes  are  returned  to 
the  treasury,  they  may  be  reissued,  from  time  to  time,  as  the 
exigencies  of  the  public  interest  may  require. 

"  Sec.  3580.  When  any  United  States  notes  returned  to  the 
treasury  are  so  mutilated  or  otherwise  injured  as  to  be  unfit 
for  use,  the  Secretaiy  of  the  Treasury  is  authorized  to  replace 
the  same  with  others  of  the  same  character  and  amounts. 

"  Sec.  3581.  Mutilated  United  States  notes,  when  replaced 
according  to  law,  and  all  other  notes  which  by  law  are  required 
to  be  taken  up  and  not  reissued,  when  taken  up  shall  be  de- 
stroyed in  such  manner  and  under  such  regulations  as  the 
Secretary  of  the  Treasury  may  j^rescribe. 

' '  Sec.  3582.  The  authority  given  to  the  Secretary  of  the 
Treasury  to  make  any  reduction  of  the  currency,  by  retiring 
and  cancelling  United  States  notes,  is  suspended." 

"Sec.  3588.  United  States  notes  shall  be  lawful  money  and 
a  legal  tender  in  payment  of  all  debts,  public  and  private,  with- 
in the  United  States,  except  for  duties  on  imports  and  interest 
on  the  public  debt." 

The  act  of  January  14,  1875,  chapter  15,  ' '  To  provide  for 
the  resumption  of  specie  payments,"  enacted,  that  on  and  after 
January  1,  1879,  "  the  Secretary  of  the  Treasury  shall  redeem 
in  coin  the  United  States  legal-tender  notes  then  outstanding, 
on  their  isresentation  for  redemption  at  the  office  of  the  Assist- 
ant Treasurer  of  the  United  States  in  the  city  of  New  York,  in 


106  APPENDIX. 

sums  of  not  less  than  fifty  clollars  ; "  and  antliorized  bim  to  use 
for  that  inu'iiose  any  surphis  revemies  in  the  treasnry  and  the 
proceeds  of  the  sales  of  certain  bonds  of  the  United  States  (18 
Stat.,  29G). 

The  act  of  May  31,  1878,  chapter  146,  under  which  the  notes 
in  question  were  reissued,  is  entitled  "An  act  to  forbid  the 
fvu-ther  retirement  of  United  States  legal-tender  notes,"  and 
enacts  as  follows  : 

"From  and  after  the  passage  of  this  act  it  shall  not  be  lawful 
for  the  Secretaiy  of  the  Treasury  or  other  officer  under  him  to 
cancel  or  retire  any  more  of  the  United  States  legal-tender 
notes.  And  when  any  of  said  notes  may  be  redeemed  or  be 
received  into  the  treasuiy  under  any  law,  from  any  source 
whatever,  and  shall  belong  to  the  United  States,  they  shall  not 
be  retired,  cancelled,  or  destroyed,  but  they  shall  be  reissued 
and  paid  out  again  and  kej)t  in  circulation  :  Provided,  that 
nothing  herein  shall  prohibit  the  cancellation  and  destruction 
of  mutilated  notes,  and  the  issue  of  other  notes  of  like  denomi- 
nation in  their  stead,  as  now  provided  by  law.  All  acts  and 
parts  of  acts  in  conflict  here-nith  are  hereby  repealed  '•'  (20 
Stat.,  87). 

The  manifest  intention  of  this  act  is  that  the  notes  which  it 
directs,  after  having  been  redeemed,  to  be  reissued  and  kept  in 
circulation,  shall  retain  their  original  quality  of  being  a  legal 
tender. 

The  single  question,  therefore,  to  be  considered,  and  upon 
the  answer  to  which  the  judgment  to  be  rendered  between 
these  parties  depends,  is  whether  notes  of  the  United  States, 
issued  in  time  of  wai-,  under  acts  of  Congress  declaring  them  to 
be  a  legal  tender  in  payment  of  private  debts,  and  afterward  in 
time  of  peace  redeemed  and  i)aid  in  gold  coin  at  the  treasuiy, 
and  then  reissued  under  the  act  of  1878,  can,  under  the  Consti- 
tution of  the  United  States,  be  a  legal  tender  in  payment  of 
such  debts. 

Upon  full  consideration  of  the  case,  the  court  is  unanimously 
of  opinion  that  it  cannot  be  distinguished  in  principle  from  the 
cases  heretofore  determined,  reported  under  the  names  of  the 


APPENDIX.  197 

Legal-tender  Cases,  12  Wall.,  457  ;  Dooly  vs.  Smith,  13  Wall., 
604  ;  Railroad  Company  vs.  Johnson,  15  AVall.,  195  ;  and  Maiy- 
land  vs.  Railroad  Company,  22  Wall.,  105;  and  all  the  Judges, 
except  Mr.  Justice  Field,  who  adheres  to  the  views  expressed 
in  his  dissenting  opinions  in  those  cases,  are  of  opinion  that 
they  were  rightly  decided. 

The  elaborate  printed  briefs  sxibmitted  by  counsel  in  this 
case,  and  the  oj)inions  delivered  in  the  Legal-tender  Cases,  and 
in  the  earlier  case  of  Hepburn  vs.  Griswold,  8  Wall.,  603,  which 
those  cases  overruled,  forcibly  present  the  arguments  on  either 
side  of  the  question  of  the  power  of  Congress  to  make  the 
notes  of  tlie  United  States  a  legal  tender  in  payment  of  private 
debts.  Without  undertakiug  to  deal  with  all  those  arguments, 
the  court  has  thoi;ghfc  it  fit  that  the  grounds  of  its  judgment  in 
the  case  at  bar  should  be  fully  stated. 

No  question  of  the  scope  and  extent  of  the  implied  powers  of 
Congress  under  the  Constitution  can  be  satisfactorily  discussed 
without  repeating  much  of  the  reasoning  of  Chief  Justice  Mar- 
shall in  the  great  judgment  in  McCullocli  vs.  Maryland,  4 
Wheat.,  316,  by  which  the  power  of  Congress  to  incorporate  a 
bank  was  demonstrated  and  affirmed,  notwithstanding  the 
Constitution  does  not  enumerate,  among  the  powers  gi-anted, 
that  of  establishing  a  bank  or  creating  a  coiijoration. 

The  jieople  of  the  United  States  by  the  Constitution  estab- 
lished a  National  Government,  with  sovereign  powers,  legis- 
lative, executive,  and  judicial.  "  The  Government  of  the 
Union,"  said  Chief  Justice  Marshall,  "though  limited  in  its 
powers,  is  supreme  within  its  sphere  of  action  ; "  "  and  its  laws, 
when  made  in  pursuance  of  the  Constitution,  form  the  supreme 
law  of  the  land."  "  Among  the  enumerated  powers  of  Govern- 
ment we  find  the  great  powers  to  lay  and  collect  taxes  ;  to 
borrow  money  ;  to  regulate  commerce  ;  to  declare  and  conduct 
a  war  ;  and  to  raise  and  support  armies  and  navies.  The  sword 
and  the  purse,  all  the  external  relations,  and  no  inconsiderable 
portion  of  the  industry  of  the  nation  are  entrusted  to  its  govern- 
ment" (4  Wheat.,  405,  406,  407). 

A  constitution  establishing  a  frame  of  government,  declarinfj 


lOS  APPENDIX. 

fundamental  principles,  and  creating  a  nationrJ  sovereignty, 
and  intended  to  endure  for  ages,  and  to  be  adapted  to  tlie 
vaidous  crises  of  human  aifairs,  is  not  to  be  interpreted  with 
the  strictness  of  a  private  contract.  The  Constitution  of  tha 
United  States,  by  apt  words  of  designation  or  general  descrip- 
tion, marks  the  outlines  of  the  jjowers  granted  to  the  National 
Legislature,  but  it  does  not  undertake  with  the  precision  and 
detail  of  a  code  of  laws  to  enumerate  the  subdivisions  of  those 
powers  or  to  specify  all  the  means  by  which  they  may  be 
carried  into  execution.  Chief  Justice  Marshall,  after  dwelling 
upon  this  view,  as  required  by  the  veiT  nature  of  the  Consti- 
tution, by  the  language  in  which  it  is  framed,  by  the  limita- 
tions ui^on  the  general  powers  of  Congress  introduced  in  the 
ninth  section  of  the  first  article,  and  by  the  omission  to  use  any 
restrictive  term  which  might  prevent  its  receiving  a  fair  and 
just  intei-pretation,  added  these  emjihatic  words  :  "  In  consider- 
ing this  question,  then,  we  must  never  forget  that  it  is  a  con- 
stitution we  are  expounding"  (-i  Wheat.,  407.  See  also  page 
415). 

The  breadth  and  comprehensiveness  of  the  words  of  the 
Constitution  are  nowhere  more  stidkingly  exhibited  than  in  re- 
gard to  the  powers  over  the  subjects  of  revenue,  finance,  and 
currency,  of  which  there  is  no  other  exi)ress  grant  than  may  be 
found  in  these  few  brief  clauses  : 

' '  The  Congi-ess  shall  have  power  to  lay  and  collect  taxes, 
duties,  imjjosts,  and  excises,  to  pay  the  debts  and  provide  for 
the  common  defence  and  general  welfare  of  the  United  States  ; 
but  all  duties,  imposts,  and  excises  shall  be  uniform  through- 
out the  United  States ; 

* '  To  borrow  money  on  the  credit  of  the  United  States  ; 

' '  To  regiilate  commerce  Avith  foreign  nations,  and  among  the 
sevei'al  States,  and  with  the  Indian  tribes  ; 

"  To  coin  money,  regulate  the  vakie  thereof,  and  of  foi'eigu 
coin,  and  fix  the  standard  of  weights  and  measures." 

The  section  which  contains  the  grant  of  these  and  other 
principal  legislative  powers  concludes  by  declaring  that  the 
Congress  shall  have  power  "  to  malie  all  laws  which  shall  be 


APPENDIX.  199 

riecGssary  and  i^roper  for  carrying  into  execution  the  foregoing 
l^owers,  and  all  other  jiowers  vested  by  this  Constitution  in  the 
Government  of  the  United  States,  or  in  any  department  or 
o£icer  thereof." 

By  the  settled  construction  and  tlie  only  reasonable  inter- 
pretation of  this  clause  the  words  "  necessary  and  proper"  are 
not  limited  to  such  measures  as  are  absolutely  and  indispen- 
sably necessaiy,  without  which  the  powers  granted  must  fail  of 
execution  ;  but  they  include  all  ajipropriate  means  which  are 
conducive  or  adapted  to  the  end  to  be  accomplished,  and 
which  in  the  judgment  of  Congress  will  most  advantageously 
effect  it. 

That  clause  of  the  Constitution  which  declares  that  ' '  the  Con- 
gress shall  have  jjower  to  lay  and  collect  taxes,  duties,  imposts, 
and  excises,  to  pay  the  debts  and  provide  for  the  common 
defence  and  general  welfare  of  the  United  States  "  either  em- 
bodies a  grant  of  jjower  to  jaay  the  debts  of  the  United  States, 
or  presupposes  and  assumes  that  power  as  inherent  in  the 
United  States  as  a  sovereign  government.  But  in  whichever 
aspect  it  be  considered,  neither  tliis  nor  any  other  clause  of  the 
Constitution  makes  any  mention  of  priority  or  preference  of 
the  United  States  as  a  creditor  over  other  creditors  of  an  indi- 
vidual debtor.  Yet  this  court,  in  the  early  case  of  United 
States  Ts.  Fisher  (2  Cranch,  358),  held  that  under  the  power  to 
pay  the  debts  of  the  United  States,  Congress  had  the  i^ower 
to  enact  that  debts  due  to  the  United  States  should  have  that 
priority  of  payment  out  of  the  estate  of  an  insolvent  debtor 
which  the  law  of  England  gave  to  debts  due  to  the  crown. 

In  delivering  judgment  in  that  case  Chief  Justice  Marshall 
expounded  the  clause  giving  Congress  power  to  make  all  neces- 
sary and  proper  laws  as  follows  :  "In  constraing  this  clause  it 
would  be  incorrect  and  would  produce  endless  difficulties  if  the 
opinion  should  be  maintained  that  no  law  was  authorized  which 
was  not  indispensably  necessary  to  give  effect  to  a  specified 
Ijower.  Where  vai-ious  systems  might  be  adopted  for  that  pur- 
pose it  might  be  said  with  resj^ect  to  each  that  it  was  not 
necessary  because  the  end  might  be  obtained  by  other  means. 


200  APPENDIX. 

Cong-ress  must  possess  the  clioice  of  means,  nnd  mnst  bo  em. 
poAvored  to  use  auy  moans  wliicli  are,  in  facit,  conducive  to  tho 
exercise  of  a  power  granted  by  the  Constitution.  The  Govern- 
ment is  to  pay  the  debt  of  the  Union,  and  must  be  authorized 
to  use  the  means  which  appear  to  itself  the  most  eligible  ta 
effect  that  object  "  (2  Cranch,  39G). 

In  McCulloch  vs.  Maryland  he  more  fully  developed  the  same 
view,  concluding  thus:  "We  admit,  as  all  must  admit,  that 
the  powers  of  the  Government  are  limited,  and  that  its  limits 
are  not  to  be  transcended.  But  we  think  the  sound  constnic- 
tion  of  the  Constitution  must  allow  to  the  National  Legislature 
that  discretion  with  respect  to  the  means  by  which  the  powers 
it  confers  are  to  be  carried  into  execution,  which  will  enable 
that  body  to  perform  the  high  duties  assigned  to  it  in  the 
manner  most  beneficial  to  the  people.  Let  the  end  be  legiti- 
mate, let  it  be  within  the  scope  of  the  Constitution,  and  all 
means  which  are  appropriate,  which  are  plainly  adapted  to 
that  end,  which  are  not  prohibited,  but  consist  with  tho  letter 
and  spirit  of  the  Constitution,  are  constitutional "  (4  Wheat., 
421). 

The  rule  of  interpretation  thus  laid  down  has  been  con- 
stantly adhered  to  and  acted  on  by  this  court,  and  was  ac- 
cepted as  expressing  the  tme  test  by  all  the  judges  who  took 
part  in  the  former  discussions  of  the  jsower  of  Congress  to  make 
the  treasury  notes  of  the  United  States  a  legal  tender  in  pay- 
ment of  private  debts. 

The  other  judgments  delivered  by  Chief  Justice  Marshall 
contain  nothing  adverse  to  the  power  of  Congress  to  issue 
legal-tender  notes. 

By  the  articles  of  confederation  of  1777,  the  United  States  in 
Congress  assembled  were  authorized  "to  borrow  money  or 
emit  bills  on  the  credit  of  the  United  States ;  "  but  it  was 
declared  that  "  each  State  retains  its  sovereignty,  freedom,  and 
independence,  and  every  power,  jurisdiction,  and  right  which 
is  not  by  this  confederation  expressly  delegated  to  the  United 
States  in  Congress  assembled  "  (Art,  2  ;  Art.  9,  Sec.  5;  1  Stat., 
4,  7).     Yet,  upon  the  question  whether,  under  those  articles, 


APPENDIX.  201 

Congress,  by  virtiio  of  tlio  power  to  emit  bills  on  the  credit  of 
the  United  States,  had  the  power  to  make  bills  so  emitted  a 
legal  tender,  Chief  Justice  ]Marshall  spoke  very  guardedly,  say- 
ing :  "  Congress  emitted  bills  of  credit  to  a  large  amount,  and 
did  not,  perhaps  could  not,  make  them  a  legal  tender.  This 
jiower  resided  iu  the  States  "  (Craig  vs.  Missouri,  4  Pet.,  410, 
435).  But  in  the  Constitution,  as  he  had  before  observed  in 
McCulloch  vs.  Maryland,  ' '  there  is  no  phrase  which,  like  the 
articles  of  confederation,  excludes  incidental  or  implied  powers, 
and  which  requires  that  everything  granted  shall  be  expressly 
and  minutely  described.  Even  the  tenth  amendment,  which 
was  framed  for  the  purjDOse  of  quieting  the  excessive  jealousies 
which  had  been  excited,  omits  the  word  *  expressly,'  and  de- 
clares only  that  the  powers  '  not  delegated  to  the  United  States, 
nor  prohibited  to  the  States,  are  reserved  to  the  States  or  to  tho 
jsGople ; '  thus  leaving  the  question  whether  the  particular  power 
which  may  become  the  subject  of  contest  has  been  delegated  to 
the  one  government  or  prohibited  to  the  other  to  depend  on  a 
fair  construction  of  the  whole  instrument.  The  men  who  drew 
and  adopted  this  amendment  had  experienced  the  embarrass- 
ments resulting  from  the  insertion  of  this  word  in  the  articles 
of  confederation,  and  probably  omitted  it  to  avoid  those  em- 
barrassments "  (4  "Wheat.,  405,  406). 

The  sentence  sometimes  quoted  from  his  opinion  in  Sttn-ges 
vs.  Crowninsliield  had  exclusive  relation  to  the  restrictions 
imposed  by  the  Constitixtion  on  the  powers  of  the  States,  and 
especial  reference  to  the  effect  of  the  clause  prohibiting  the 
States  from  passing  laws  impairing  the  obligation  of  contracts, 
as  will  clearly  appear  by  quoting  the  whole  j)aragraph  :  "Was 
this  general  prohibition  intended  to  prevent  paper  money? 
We  are  not  allowed  to  say  so,  because  it  is  expressly  provided 
that  no  State  shall  '  emit  bills  of  credit ; '  neither  could  these 
words  be  intended  to  restrain  the  States  from  enabling  debtors 
to  discharge  their  debts  by  the  tender  of  property  of  no  real 
value  to  the  creditor,  because  for  that  subject  also  particular 
provision  is  made.  Nothing  but  gold  and  silver  coin  can  be 
made  a  tender  in  payment  of  debts"  (4  Wheat.,  122,  204). 
9* 


202  APPENDIX. 

Such  roiiorts  as  have  come  down  to  ns  of  the  flebates  in  the 
couveution  that  framed  the  Constitution  afford  no  proof  of  any 
general  concurrence  of  opinion  upon  the  subject  before  us. 
The  adoption  of  the  motion  to  strike  out  the  words  "  and  emit 
bills  "  from  the  clause  "  to  borrow  money  and  emit  bills  on  the 
credit  of  the  United  States  "  is  quite  inconclusive.  The  philip- 
jjic  delivered  before  the  Assembly  of  IMaryland  by  Mr.  Martin, 
one  of  the  delegates  from  that  State,  who  voted  against  the 
motion,  and  who  declined  to  sign  the  Constitution,  can  hardly 
be  accepted  as  satisfactory  evidence  of  the  reasons  or  the 
motives  of  the  majority  of  the  convention  (see  1  Elliot's 
Debates,  345,  370,  376).  Some  of  the  members  of  the  conven- 
tion, indeed,  as  appears  by  Mr.  Madison's  minutes  of  the  de- 
bates, expressed  the  strongest  opposition  to  paper  money. 
And  Mr.  Madison  has  disclosed  the  grounds  of  his  own  action 
by  recording  that  "  this  vote  in  the  affirmative  by  Virginia  was 
occasioned  by  the  acquiescence  of  Mr.  Madison,  who  became 
satisfied  that  striking  out  the  words  would  not  disable  the 
Government  from  the  use  of  public  notes,  so  far  as  they  could 
be  safe  and  proper ;  and  would  only  cut  off  the  pretext  for  a 
paper  currency,  and  particularly  for  making  the  bills  a  tender 
either  for  public  or  private  debts." 

But  he  has  not  explained  why  he  thought  that  striking  out 
the  words  "and  emit  bills  "  would  leave  the  power  to  emit  bills, 
and  deny  the  power  to  make  them  a  tender  in  payment  of 
debts.  And  it  cannot  be  known  how  many  of  the  other  dele- 
gates, by  whose  vote  the  motion  was  adopted,  intended  neither 
to  proclaim  nor  to  deny  the  power  to  emit  paper  money, 
and  were  influenced  by  the  argument  of  Mr.  Gorham,  who 
"  was  for  striking  out,  without  inserting  any  prohibition,"  and 
who  said :  "  If  the  words  stand,  they  may  suggest  and  load  to 
the  emission. "  ' '  The  power,  so  far  as  it  will  be  necessaiy  or 
safe,  will  be  involved  in  that  of  borrowing "  (5  Elliot's  De- 
bates, 434,  435,  and  note).  And  after  the  first  clause  of  the 
tenth  section  of  the  first  article  had  been  reported  in  the  form 
in  which  it  now  stands,  forbidtling  the  States  to  make  anything 
but  gold  or  silver  coin  a  tender  in  payment  of  debts,  or  to  pass 


APPENDIX.  203 

rtny  law  impairing  the  obligation  of  contracts,  when  Mr.  Gerry, 
as  reported  by  Mr.  Madison,  "  entered  into  obsei'vations  incnl' 
eating  the  importance  of  public  faith,  and  the  propriety  of  the 
restraint  put  on  the  States  from  impairing  the  obligation  of 
contracts,  alleging  that  Congress  ought  to  be  laid  under  the 
like  prohibitions,"  and  made  a  motion  to  that  effect,  he  was 
not  seconded  (ib.,  546).  As  an  illustration  of  the  danger  of 
giving  too  much  weight  upon  such  a  question  to  the  debates 
and  the  votes  in  the  convention,  it  may  also  be  observed  that 
propositions  to  authorize  Congress  to  grant  charters  of  incor- 
poration for  national  objects  were  strongly  opposed,  esiDecially 
as  regarded  banks,  and  defeated  (ib.,  440,  543,  544).  The 
power  of  Congress  to  emit  bills  of  credit,  as  well  as  to  incor- 
porate national  banks,  is  now  clearly  established  by  decisions 
to  which  we  shall  presently  refer. 

The  words  "to  borrow  money,"  as  used  in  the  Constitution, 
to  designate  a  power  vested  in  the  National  Government,  for 
the  safety  and  welfare  of  the  whole  peojile,  are  not  to  receive 
that  limited  and  restricted  interpretation  and  meaning  which 
they  would  have  in  a  penal  statute,  or  in  an  authority  coufeiTed, 
by  law  or  by  contract,  upon  trustees  or  agents  for  private  pur- 
poses. 

The  power  ' '  to  boiTow  money  on  the  credit  of  the  United 
States "  is  the  power  to  raise  money  for  the  public  use  on  a 
pledge  of  the  public  credit,  and  may  be  exercised  to  meet 
either  present  or  anticipated  exj)enses  and  liabilities  of  the 
Government.  It  includes  the  power  to  issue,  in  return  for  the 
money  boiTowed,  the  obligations  of  the  United  States  in  any 
api^ropriate  form,  of  stock,  bonds,  bills,  or  notes  ;  and  in  what- 
ever form  they  are  issued,  being  instruments  of  the  National 
Government,  they  are  exempt  from  taxation  by  the  governments 
of  the  several  States  (Western  vs.  Charleston  City  Council,  2 
Pet.,  449  ;  Banks  rs.  Mayor,  7  Wall.,  16  ;  Bank  vs.  Supervisors, 
7  Wall.,  26).  Congress  has  authority  to  issue  these  obligations 
in  a  form  adapted  to  circulation  from  hand  to  hand  in  the 
ordinary  transactions  of  commerce  and  business.  In  order  to 
promote  and  facilitate  such  circulation,  to  adapt  them  to  use  as 


204  APPENDIX. 

cniToncr,  and  to  make  ihom  moro  cnn-ent  in  f  lio  market,  it  may 
I^roviilo  for  thoir  rodomption  in  coin  or  bonds,  and  may  mako 
tlieiu  receivable  in  jjayment  of  debts  to  the  Government.  So 
much  is  settled  beyond  doubt,  and  was  asserted  or  distinctly 
admitted  by  the  judges  who  dissented  from  the  decision  in  the 
Legal-tender  Cases,  as  well  as  by  those  who  concun-ed  in  that 
decision  (Veazie  Bank  vs.  Fcnuo,  8  Wall.,  533,  548  ;  Hejibum 
rs.  Griswold,  8  Wall.,  GIG,  63G ;  Legal-tender  Cases,  12  Wall., 
543,  544,  5G0,  582,  GIO,  G13,  G37). 

It  is  equally  well  settled  that  Congress  has  the  power  to  in- 
corporate national  banks,  with  the  capacity,  for  their  own  profit 
as  well  as  for  the  use  of  the  Govei-nment  in  its  money  trans- 
actions, of  issuing  bills  which  under  ordinaiy  circumstances 
jiass  from  hand  to  hand  as  money  at  their  nominal  value,  and 
which,  when  so  cun-eut,  the  law  has  always  recognized  as  a 
good  tender  in  payment  of  money  debts,  unless  specifically 
objected  to  at  the  time  of  the  tender  (United  States  Bank  vs. 
Bank  of  Georgia,  10  Wheat.,  333,  347;  Ward  vs.  Smith,  7WaU., 
447,  451).  The  power  of  Congi'ess  to  charter  a  bank  was  main- 
tained in  McCuUoch  vs.  Maiyland,  4  Wheat.,  316,  and  in  Os- 
bom  zs.  United  States  Bank,  9  Wheat.,  738,  chiefly  ujion  the 
ground  that  it  was  an  ai:)propriate  means  for  canying  on  the 
money  transactions  of  the  Government.  But  Chief  Justice 
Marshall  said  :  ' '  The  currency  which  it  circulates,  by  means  of 
its  trade  with  indi^iduals,  is  believed  to  make  it  a  more  fit 
instniment  for  the  purposes  of  government  than  ib  could  other- 
wise he ;  and,  if  this  be  true,  the  capacity  to  carry  on  this  trade 
is  a  faculty  indispensable  to  the  character  and  ol»jccts  of  the 
institution  "  (9  Wheat.,  8G4).  And  Mr.  Justice  Johnson,  who 
conciu'red  with  the  rest  of  the  court  in  upholding  the  power  to 
incoii^orate  a  bank,  gave  the  further  reason  that  it  tended  to 
give  eflfect  to  ' '  that  j^ower  over  the  currency  of  the  country 
which  the  framers  of  the  Constitution  evidently  intended  to  give 
to  Congress  alone  "  (ib.,  873). 

The  constitutional  authority  of  Congress  to  provide  a  cur- 
rency for  the  whole  country  is  now  fii'mly  established.  In 
Yeazie  Bank  vs.  Fenno,  8  Wall. ,  533,  548,  Chief  Justice  Chase, 


APPENBIX.  205 

in  delivering  the  opinion  of  tlio  court,  said :  '*  It  cannot  bo 
doubted  that  under  the  Constitution  the  power  to  provide  a 
circulation  of  coin  is  given  to  Congress.  And  it  is  settled  by 
the  uniform  practice  of  the  Government,  and  by  repeated  deci- 
sions, that  Congress  may  constitutionally  authorize  the  emission 
of  bills  of  credit."  Congress,  having  undei-taken  to  supply  a 
national  currency,  consisting  of  coin,  of  treasury  notes  of  tho 
United  States,  and  of  bills  of  national  banks,  is  authorized  to 
impose  on  all  State  banks,  or  national  banks,  or  private  bankers', 
paying  out  the  notes  of  individuals  or  of  State  banks,  a  tax  of 
ten  per  cent,  upon  the  amount  of  such  notes  so  paid  out 
(Veazie  Bank  vs.  Fenno,  above  cited  ;  National  Bank  vs.  United 
States,  101  U.  S.,  1).  The  reason  for  this  conclusion  was  stated 
by  Chief  Justice  Chase,  and  repeated  by  the  present  Chief 
Justice,  in  these  words  :  ' '  Having  thus,  in  the  exercise  of  un- 
disputed constitutional  powers,  undertaken  to  provide  a  cur- 
rency for  the  whole  country,  it  cannot  be  questioned  that 
Congress  may,  constitutionally,  secure  the  benefit  of  it  to  the 
people  by  appropriate  legislation.  To  this  end.  Congress  has 
denied  the  quality  of  legal  tender  to  foreign  coins,  and  has 
l^rovided  by  law  against  the  imposition  of  counterfeit  and  base 
coin  on  the  community.  To  the  same  end,  Congress  may  re- 
strain, by  suitable  enactments,  the  circulation  as  money  of  any 
notes  not  issued  under  its  own  authority.  Without  this  power, 
indeed,  its  attempts  to  secure  a  sound  and  uniform  currency  for 
the  country  must  be  futile  "  (8  Wall.,  549  ;  101  U.  S.,  G). 

By  the  Constitution  of  the  United  States  the  several  States 
are  prohibited  from  coining  money,  emitting  bills  of  credit,  or 
making  anything  but  gold  and  silver  coin  a  tender  in  payment 
of  debts.  But  no  intention  can  be  inferred  from  this  to  deny 
to  Congress  either  of  these  powers.  Most  of  the  powers  granted 
to  Congress  are  described  in  the  eighth  section  of  the  first 
article  ;  the  limitations  intended  to  be  set  to  its  powers,  so  as 
to  exclude  certain  things  which  might  otherwise  be  taken  to  be 
included  in  the  general  grant,  are  defined  in  the  ninth  section  ; 
the  tenth  section  is  addressed  to  the  States  only.  This  section 
prohibits  the  States  from  doing  some  things  which  the  United 


-H^G  APPENDIX. 

States  are  expressly  prohibited  from  doing,  aa  well  as  from 
doing  some  things  which  the  United  States  are  exjiressly  au- 
thorized to  do,  aud  from  doing  some  things  which  are  neither 
expressly  granted  nor  ex^n-essly  denied  to  the  United  States. 
Congress  and  the  States  equally  are  expressly  prohibited  from 
l)assing  any  bill  of  attainder  or  ex  j^ost  facto  law,  or  granting 
any  title  of  uobility.  The  States  are  forbidden,  while  the  Pres- 
ident and  Senate  are  expressly  aiithorized,  to  make  treaties.  The 
States  are  forbidden,  but  Congress  is  expressly  authorized,  to 
coin  money.  The  States  are  prohibited  from  emitting  bills  of 
credit ;  but  Congress,  which  is  neither  expressly  authorized  nor 
expressly  forbidden  to  do  so,  has,  as  we  have  already  seen,  been 
held  to  have  the  power  of  emitting  bills  of  credit,  and  of 
making  every  pro\dsion  for  their  circulation  as  currency,  short 
of  giving  them  the  quality  of  legal  tender  for  private  debts- 
even  by  those  who  have  denied  its  authority  to  give  them  this 
quality. 

It  appears  to  us  to  follow,  as  a  logical  and  necessary  conse- 
quence, that  Congress  has  the  power  to  issue  the  obligations  of 
the  United  States  in  such  form,  and  to  impress  ujion  them  such 
qualities  as  currency  for  the  jjurchase  of  merchandise  and  the 
payment  of  debts,  as  accord  with  the  usage  of  sovereign  gov- 
ernments. The  power,  as  incident  to  the  power  of  borrowing 
money  and  issuing  bills  or  notes  of  the  Government  for  money 
borrowed,  of  impressing  uj^on  those  bills  or  notes  the  quality  of 
being  a  legal  tender  for  the  payment  of  private  debts,  was  a 
power  universally  understood  to  belong  to  sovereignty,  in 
Eurojie  and  America,  at  the  time  of  the  framing  and  adoption 
of  the  Constitution  of  the  United  States.  The  governments  of 
Europe,  acting  through  the  monarch  or  the  legislature,  accord- 
ing to  the  distribution  of  powers  under  their  respective  consti- 
tutions, had  and  have  as  sovereign  a  jiower  of  issuing  jaaper 
money  as  of  stamping  coin.  This  power  has  been  distinctly 
recognized  in  an  important  modern  case,  ably  argued  and  fully 
considered,  in  which  the  Emperor  of  Austria,  as  King  of  Hun- 
gary, obtained  from  the  English  Court  of  Chanceiy  an  injunc- 
tion against  the  issue  in  England,  without  his  license,  of  notes 


APPENDIX.  207 

purporting  to  be  puhlic  paper  money  of  Hungary  (Austria  ?'.<?. 
Day,  2  Gitf.,  628,  and  3  D.  F.  &  J.,  217).  The  power  of  issuing 
bills  of  credit,  and  making  them,  at  the  discretion  of  the  legis- 
lature, a  tender  in  j^ayment  of  private  debts,  had  long  been 
exercised  in  this  counti-y  by  the  several  Colonies  and  States  ; 
and  during  the  Eevolutionary  War  the  States,  upon  the  recom- 
mendation of  the  Congress  of  the  Confederation,  had  made  the 
bills  issued  by  Congress  a  legal  tender  (see  Craig  vs.  Missouri, 
4  Pet.,  435,  453  ;  Briscoe  vs.  Bank  of  Kentucky,  11  Pet.,  257, 
313,  334-336;  Legal-tender  Cases,  12  Wall.,  557,  558,  622; 
Phillips  on  American  Paper  Currency,  j)(7ssMn).  The  exercise  of 
this  i^ower  not  being  prohibited  to  Congress  by  the  Constitu- 
tion, it  is  included  in  the  power  expressly  gi-anted  to  borrow 
money  on  the  credit  of  the  United  States. 

This  position  is  fortified  by  the  fact  that  Congress  is  vested 
■with  the  exclusive  exercise  of  the  analogous  power  of  coining 
money  and  regulating  the  value  of  domestic  and  foreign  coin, 
and  also  with  the  i3aramount  power  of  regulating  foreign  and 
interstate  commerce.  Under  the  i3ower  to  borrow  money  on 
the  credit  of  the  United  States,  and  to  issue  circulating  notes 
for  the  money  borrowed,  its  jDower  to  define  the  quality  and 
force  of  those  notes  as  currency  is  as  broad  as  the  like  power 
over  a  metallic  currency  under  the  power  to  coin  money  and  to 
regulate  the  value  thereof.  Under  the  two  jjowers,  taken  to- 
gether, Congress  is  aiithorized  to  establish  a  national  currency, 
either  in  coin  or  in  paper,  and  to  make  that  currency  lawful 
money  for  all  purposes,  as  regards  the  National  Government  or 
private  individuals. 

The  j)ower  of  making  the  notes  of  the  United  States  a  legal 
tender  in  payment  of  private  debts  being  included  in  the 
jDOwer  to  borrow  money  and  to  provide  a  national  currency,  is 
not  defeated  or  restricted  by  the  fact  that  its  exercise  may 
affect  the  value  of  private  contracts.  If,  upon  a  just  and  fair 
interpretation  of  the  whole  Constitution,  a  particular  power  or 
authority  appears  to  be  vested  in  Congress,  it  is  no  constitu- 
tional objection  to  its  existence,  or  to  its  exercise,  that  the  prop- 
erty or  the  contracts  of  individuals  may  be  incidentally  afi'ectcd. 


208  APPENDIX. 

Tho  decisions  of  tins  court,  nlrcady  cited,  affortl  severa.1  eX' 
ami)los  of  this. 

Upon  tlie  issue  of  stock,  bonds,  bills,  or  notes  of  the  United 
States,  the  States  are  deprived  of  their  power  of  taxation  to  the 
extent  of  the  property  invested  by  individuals  in  such  obliga- 
tions, and  the  burden  of  State  taxation  upon  other  private  prop- 
erty is  correspondingly  increased.  The  ten  per  cent,  tax  im- 
posed by  Congress  on  notes  of  State  banks  and  of  private 
bankers  not  only  lessens  tho  value  of  such  notes,  but  tends 
to  drive  them,  and  all  State  banks  of  issue,  out  of  existence. 
The  priority  given  to  debts  due  to  the  United  States  over  the 
private  debts  of  an  insolvent  debtor  diminishes  the  value  of 
these  debts,  and  the  amount  which  their  holders  may  receive 
out  of  the  debtor's  estate. 

So,  under  the  jiower  to  coin  money  and  to  regulate  its  value, 
Congress  may  (as  it  did  with  regard  to  gold  by  the  act  of  June 
28,  1834,  eh.  95,  and  with  regard  to  silver  by  the  act  of 
FebiiTary  28,  1878,  ch.  20)  issue  coins  of  the  same  denomina- 
tion as  those  already  current  by  law,  but  of  less  intrinsic  value 
than  those  by  reason  of  containing  a  less  weight  of  the  precious 
metals,  and  thereby  enable  debtors  to  discharge  their  debts 
by  the  jiayment  of  coins  of  the  less  real  value.  A  contract  to 
pay  a  certain  sum  in  money,  without  any  stii^ulation  as  to  the 
kind  of  money  in  which  it  shall  be  paid,  may  always  be  satis- 
fied by  payment  of  that  sum  in  any  currency  which  is  lawful 
money  at  the  place  and  time  at  which  payment  is  to  be  made 
(I  Hale,  P.  C,  192-194 ;  Bac.  Al\  Tender,  B.  2  ;  Pothier,  Con- 
tract of  Sale,  No.  41G  ;  Pardessus,  Droit  Commercial,  Nos.  204, 
205  ;  Searight  vs.  Calbraith,  4  Dall.,  324).  As  observed  by  Mr. 
Justice  Strong,  in  delivering  the  opinion  of  the  court  in  the 
Legal-tender  Cases,  "  Every  contract  for  the  payment  of  money, 
simply,  is  necessarily  subject  to  the  constitutional  power  of  the 
Government  over  the  currency,  whatever  that  power  may  be, 
and  the  obligation  of  the  jiarties  is,  therefore,  assumed  with 
reference  to  that  j)ower"  (12  "Wall.,  549). 

Congress,  as  the  legislature  of  a  sovereign  nation,  being  ex- 
pressly empowered  by  the   Constitution   "  to  lay  and  collect 


APPENDIX.  209 

taxes,  to  pay  the  debts  and  provide  for  tlie  common  defence 
and  general  welfare  of  the  United  States,"  and  "  to  borrow 
money  on  the  credit  of  the  United  States,"  and  "  to  coin  money 
and  regulate  the  value  thereof  and  of  foreign  coin  ;"  and  being 
clearly  authorized,  as  incidental  to  the  exercise  of  those  great 
powers,  to  emit  bills  of  credit,  to  -charter  national  banks,  and 
to  i^rovide  a  national  cuiTency  for  the  whole  people,  in  the 
form  of  coin,  treasury  notes,  and  national  bank  bills ;  and  the 
power  to  make  the  notes  of  the  Government  a  legal  tender  in 
payment  of  private  debts  being  one  of  the  powers  belonging  to 
sovereignty  in  other  civilized  nations,  and  not  expressly  with- 
held from  Congress  by  the  Constitution  ;  we  are  irresistibly 
impelled  to  the  conclusion  that  the  impressing  upon  the  treas- 
ury notes  of  the  United  States  the  quality  of  being  a  legal 
tender  in  payment  of  private  debts  is  an  appropriate  means, 
conducive  and  plainly  adapted  to  the  execution  of  the  un- 
doubted powers  of  Congress,  consistent  with  the  letter  and 
spirit  of  the  Constitution,  and  thex'efore,  within  the  meaning  of 
that  instrument,  "necessary  and  proper  for  carrying  into  execu- 
tion the  powers  vested  by  this  Constitution  in  the  Government 
of  the  United  States." 

Such  being  our  conclusion  in  matter  of  law,  the  question 
whether  at  any  particular  time,  in  war  or  in  peace,  the  exigency 
is  such,  by  reason  of  unusual  and  pressing  demands  on  the 
resources  of  the  Government,  or  of  the  inadequacy  of  the 
supply  of  gold  and  silver  coin  to  furnish  the  currency  needed 
for  the  uses  of  the  Government  and  of  the  people,  that  it  is,  as 
matter  of  fact,  wise  and  expedient  to  resort  to  this  means,  is  a 
political  question,  to  be  determined  by  Congress  when  the 
question  of  exigency  arises,  and  not  a  judicial  question,  to  be 
afterward  x^assed  upon  by  the  courts.  To  quote  once  more 
from  the  judgment  in  McCulloch  vs.  Maryland:  "Where  the 
law  is  not  prohibited,  and  is  really  calculated  to  effect  any  of 
the  objects  entrusted  to  the  Government,  to  undertake  here  to 
inquire  into  the  degree  of  its  necessity  would  be  to  pass  the 
line  which  circumscribes  the  judicial  department,  and  to  tread 
on  legislative  ground  "  (4  Wheat.,  423). 


210  APPENDIX. 

It  follows  that  tho  act  of  May  31,  1878,  cli.  146,  is  constitu^ 
tional  and  valid  ;  and  that  tho  Circuit  Court  rightly  held  that 
tho  louder  iu  treasury  notes,  reissued  and  kept  in  circalation 
under  that  act,  was  a  tender  of  lawful  money  iu  payment  of  the 
defendant's  debt  to  the  plaintiff. 

Judgment  affirmed. 

Mr.  Justice  Field  wrote  a  dissenting  opinion,  as  follows  : 
From  the  judgment  of  the  court  in  this  case,  and  from  all 
the  positions  advanced  in  its  support,  I  dissent.  The  question 
of  the  power  of  Congress  to  impart  the  quality  of  legal  tender 
to  the  notes  of  the  United  States,  and  thus  make  them  money 
and  a  standard  of  .value,  is  not  new  here.  Unfortunately,  it 
has  been  too  frequently  before  the  court,  and  its  latest  decision, 
previous  to  this  one,  has  never  been  entirely  accepted  and  ap- 
proved by  the  country.  Nor  should  this  excite  surprise  ;  for 
whenever  it  is  declared  that  this  Government,  ordained  to 
establish  jiistice,  has  the  power  to  alter  the  condition  of  con- 
tracts between  private  parties,  and  authorize  their  payment  or 
discharge  in  something  different  from  that  which  the  parties 
stii^ulated,  thus  disturbing  the  relations  of  commerce  and  the 
business  of  the  community  generally,  the  doctrine  will  not  and 
ought  not  to  be  readily  accepted.  There  will  be  many  who 
will  adhere  to  the  teachings  and  abide  by  the  faith  of  their 
fathers.  So  the  question  has  come  again,  and  will  continue  to 
come  until  it  is  settled  so  as  to  uphold  aud  not  impair  the  con- 
tracts of  parties,  to  promote  aud  not  defeat  justice. 

If  there  be  anything  in  the  history  of  the  Constitution  which 
can  be  established  with  moral  certainty,  it  is  that  the  framers 
of  that  instrument  intended  to  prohibit  the  issue  of  legal-tender 
notes  both  by  the  general  Government  and  by  the  States  ;  and 
thus  prevent  interference  with  the  contracts  of  private  j^arties. 
During  the  Eevolution  and  the  period  of  the  old  Confederation, 
the  Continental  Congress  issued  bills  of  credit,  and  upon  its 
recommendation  the  States  made  them  a  legal  tender,  and  the 
refusal  to  receive  them  an  extinguishment  of  the  debts  for 
which  they  were  offered.     They  also  enacted  severe  penalties 


APPENDIX.  211 

against  those  who  refused  to  accept  them  at  their  nominal 
vahie,  as  equal  to  coin,  in  exchange  for  commodities.  And 
previously,  as  early  as  January,  1776,  Congress  had  declared 
that,  if  any  jjerson  should  be  "so  lost  to  all  virtue  and  regard 
for  his  country  "  as  to  refuse  to  receive  in  payment  the  bills 
then  issued,  he  shoiild,  on  conviction  thereof,  be  "deemed, 
published,  and  treated  as  an  enemy  of  his  country,  and  j)re- 
cluded  from  all  trade  and  intercourse  with  the  inhabitants  of 
the  colonies." 

Yet,  this  legislation  ^Droved  ineffectual ;  the  universal  law  of 
cuiTency  ijrevailed,  which  makes  promises  of  money  valuable 
only  as  they  are  convertible  into  coin.  The  notes  depreciated 
until  they  became  valueless  in  the  hands  of  their  i^ossessors. 
So  it  always  will  be  ;  legislative  declaration  cannot  make  the 
promise  of  a  thing  the  equivalent  of  the  thing  itself. 

The  legislation  to  which  the  States  were  thus  indiiced  to  re- 
sort was  not  confined  to  the  attem^it  to  make  i^aper  money  a 
legal  tender  for  debts  ;  but  the  principle  that  private  contracts 
could  be  legally  impaired,  and  their  obligation  disregarded, 
being  once  established,  other  measu.res  equally  dishonest  and 
destructive  of  good  faith  between  parties  were  adopted.  What 
followed  is  thus  stated  by  Mr.  Justice  Story,  in  his  ' '  Commen- 
taries :  " 

"  The  history,  indeed,"  he  says,  "  of  the  various  laws  which 
were  passed  by  the  States,  in  their  colonial  and  independent 
character,  upon  this  subject,  is  startling  at  once  to  our  morals, 
to  our  patriotism,  and  to  our  sense  of  justice.  Not  only  was 
paper  money  issued  and  declared  to  be  a  tender  in  payment  of 
debts,  but  laws  of  another  character,  well  known  under  the 
appellation  of  tender  laws,  appraisement  laws,  instalment  laws, 
and  suspension  laws,  were  from  time  to  time  enacted,  which 
prostrated  all  private  credit  and  all  private  morals.  By  some 
of  these  laws  the  due  payment  of  debts  was  suspended  ;  debts 
were,  in  violation  of  the  very  terms  of  the  contract,  authorized 
to  be  paid  by  instalments  at  different  periods  ;  property  of  any 
sort,  however  worthless,  either  real  or  jjersonal,  might  be  ten- 
dered by  the  debtor  in  payment  of  his  debts  ;  and  tho  creditor 


212  APPENDIX. 

was  compelled  to  take  tlie  iiroperty  of  the  debtor,  -wliicli  lie 
might  seize  ou  execution,  at  au  appraisement  wholly  dispro- 
portionate to  its  known  value.  Such  grievances  and  oppres- 
sions, and  others  of  a  like  nature,  were  the  ordinary  results  of 
legislation  during  the  Revolutionary  War  and  the  intermediate 
period  down  to  the  formation  of  the  Constitution.  They  en- 
tailed the  most  enormous  evils  on  the  country,  and  introduced 
a  system  of  fraud,  chicanery,  and  profligacy  which  destroyed 
all  ijrivate  confidence  and  all  industry  and  enterprise "  (2 
Story  on  the  Constitution,  §  1371). 

To  put  an  end  to  this  vicious  system  of  legislation  which 
only  encouraged  fraud,  thus  graphically  desci-ibed  by  Story, 
the  clauses  which  forbid  the  States  from  emitting  bills  of  credit 
or  making  anything  but  gold  and  silver  a  tender  in  payment  of 
debts,  or  passing  any  law  impairing  the  obligation  of  contracts, 
were  inserted  in  the  Constitution. 

"  The  attention  of  the  convention,  therefore,"  says  Chief 
Justice  Marshall,  ' '  was  jjarticularly  directed  to  paper  money 
and  to  acts  which  enabled  the  debtor  to  discharge  his  debt 
otherwise  than  was  stipulated  in  the  contract.  Had  nothing 
more  been  intended,  nothing  moi'e  would  have  been  expressed, 
but  in  the  opinion  of  the  convention  much  more  remained  to 
be  done.  The  same  mischief  might  be  effected  by  other  means. 
To  restore  i^ublic  confidence  completely,  it  was  necessary,  not 
only  to  prohibit  the  use  of  particular  means  by  which  it  might 
be  effected,  but  to  ijrohibit  the  use  of  any  means  by  which  the 
same  mischief  might  be  produced.  The  convention  appears 
to  have  intended  to  establish  a  great  principle,  that  contracts 
should  be  in\iolable "  (Sturges  vs.  Crowuinshield,  4  Wheat., 
122,  206). 

It  would  be  difficult  to  believe,  even  in  the  absence  of  the 
historical  e\T.dence  we  have  on  the  subject,  that  the  framers  of 
the  Constitution,  profoundly  impressed  by  the  e\dls  resulting 
from  this  kind  of  legislation,  ever  intended  that  the  new  Gov- 
ernment, ordained  to  establish  justice,  should  possess  the  power 
of  making  its  bills  a  legal  tender,  which  they  were  unwilling 
should  remain  with  the  States,   and  which   in  the  past  had 


APPENDIX.  213 

liroved  so  clangerons  to  the  peace  of  tlio  community,  so  dis- 
turbing to  the  business  of  the  people,  and  so  destructive  of 
their  morality. 

The  great  historian  of  our  country  has  recently  given  to  tho 
world  a  history  of  the  convention,  the  result  of  years  of  labor 
in  the  examination  of  all  jjublic  documents  relating  to  its  for- 
mation, and  of  the  recorded  opinions  of  its  framers  ;  and  thus 
ho  writes  : 

"With  the  full  recollection  of  the  need  or  seeming  need  of 
paper  money  in  the  Revolution,  with  the  menace  of  danger  in 
future  time  of  war  from  its  prohibition,  authority  to  issue  bills 
of  credit  that  should  be  legal  tender  was  refused  to  the  gen- 
eral Government  by  the  vote  of  nine  States  against  New  Jersey 
and  Maryland.  It  was  Madison  who  decided  the  vote  of  Vir- 
ginia, and  he  has  left  his  testimony  that  '  the  pretext  for  a 
jiaper  currency,  and  particulai'ly  for  making  the  bills  a  tender, 
either  for  public  or  private  debts,  was  cut  off.'  This  is  the  in- 
terpretation of  the  clause  made  at  the  time  of  its  adoption,  alike 
by  its  authors  and  by  its  opponents,  acceijted  by  all  the  states- 
men of  that  age,  not  open  to  dispute  because  too  clear  for 
argument,  and  never  disputed  so  long  as  any  one  man  who  took 
part  in  framing  the  Constitution  remained  alive.  History  can- 
not name  a  man  who  has  gained  enduring  honor  by  causing 
the  issue  of  paper  money.  Wherever  such  paper  has  been  em- 
ployed it  has  in  every  case  thrown  upon  its  authors  the  burden 
of  exculpation  under  the  plea  of  pressing  necessity"  (Ban- 
croft's History  of  the  Formation  of  the  Constitution,  vol.  2, 
134). 

And  when  the  convention  came  to  the  prohibition  upon  the 
States,  the  historian  says  that  the  clause,  "No  State  shall  make 
anything  but  gold  and  silver  a  tender  in  payment  of  debts," 
was  accepted  without  a  dissentient  State.  *  *  So  the  adoption  of 
the  Constitution,"  he  adds,  "is  to  be  the  end  forever  of  pajier 
money,  whether  issued  by  the  several  States  or  by  the  United 
States,  if  the  Constitution  shall  be  rightly  interpreted  and 
honestly  obeyed"  (id.,  137). 

For  nearly  three-fourths  of  a  century  after  the  adoption  of 


214  APPENDIX. 

tho  Constiiution,  find  until  tlio  lop;islation  diiring  the  recent 
civil  war,  no  jurist  and  no  statesman  of  any  position  in  the 
countiy  ever  pretended  that  a  power  to  impart  the  quality  of 
legal  tender  to  its  notes  was  vested  in  the  general  Govei'nment. 
There  is  no  recorded  word  of  even  one  in  favor  of  its  })ossessing 
the  })ower.  All  conceded,  as  an  axiom  of  constitutional  law, 
that  the  power  did  not  exist. 

]Mr.  Webstei-,  from  his  first  entrance  into  public  life  in  1812, 
gave  great  consideration  to  the  subject  of  tho  currency,  and  in 
an  elaborate  speech  on  that  subject,  made  in  the  Senate  in 
1S3G,  then  sitting  in  this  room,  he  said  :  "  Currency,  in  a  largo 
and  perhaps  just  sense,  includes  not  only  gold  and  silver  and 
bank  bills,  but  bills  of  exchange  also.  It  may  include  all  that 
adjusts  exchanges  and  settles  balances  in  the  operations  of 
trade  and  business  ;  but  if  we  understand  by  currency  the  legal 
money  of  the  country,  and  that  which  constitutes  a  legal  tender 
for  debts,  and  is  the  standard  measure  of  value,  then  undoubt- 
edly nothing  is  included  but  gokl  and  silver.  Most  unques- 
tionably there  is  no  legal  tender,  and  there  can  be  no  legal 
tender  in  this  country,  iinder  the  authority  of  this  Government 
or  any  other,  but  gold  and  silver,  either  the  coinage  of  our  own 
mints  or  foreign  coins  at  rates  regulated  by  Congress.  This  is 
a  constitutional  principle,  j^erfectly  plain  and  of  the  highest 
importance.  The  States  are  expressly  prohibited  from  making 
anything  but  gold  and  silver  a  legal  tender  inpayment  of  debts, 
and  although  no  such  ex^jress  prohibition  is  api^Hcd  to  Con- 
gress, yet,  as  Congress  has  no  power  granted  to  it  in  this  respect 
but  to  coin  money  and  to  regulate  the  valire  of  foreign  coins,  it 
clearly  has  no  power  to  substitute  pai^er  or  anything  else  for 
coin  as  a  tender  in  jjayment  of  debts  and  in  discharge  of  con- 
tracts. Congress  has  exercised  this  power  fully  in  both  its 
branches ;  it  has  coined  money,  and  still  coins  it ;  it  has  regu- 
lated the  value  of  foreign  coins,  and  still  regulates  their  value. 
The  legal  tender,  therefore,  the  constitutional  standard  of 
value,  is  established  and  cannot  be  overthrown.  To  overthrow 
it  would  shake  tho  whole  system  "  (4  Webster's  Works,  271). 

When  the  idea  of  imparting  the  legal  tender  quality  to  tha 


APPENDIX.  215 

notes  of  the  United  States  issued  under  the  first  act  of  1862 
was  first  broached,  the  advocates  of  the  measure  rested  their 
sn2)port  of  it  on  the  ground  that  it  was  a  war  measure,  to 
which  the  country  was  compelled  to  resort  by  the  exigencies  of 
its  condition,  being  then  sorely  pressed  by  the  Confederate 
forces,  and  requiring  the  daily  expenditure  of  enormous  sums 
to  maintain  its  army  and  navy  and  to  carry  on  the  Govern- 
ment. The  Eepresentative  who  introduced  the  bill  in  the 
House  declared  that  it  was  a  measure  of  that  natui'e,  "  one  of 
necessity  and  not  of  choice  ;  "  that  the  times  were  extraordi- 
nary and  that  extraordinary  measures  must  be  resorted  to  iu 
order  to  save  our  Government  and  preserve  our  nationality 
(speech  of  Spaulding,  of  New  York,  Cong.  Globe,  1861-62,  Part 
1,  523).  O.her  members  of  the  House  frankly  confessed  their 
doubt  as  to  its  constitutionality,  but  yielded  their  support  of  it 
under  the  pressure  of  this  supposed  necessity. 

In  the  Senate  also  the  measure  was  i^ressed  for  the  same 
reasons.  When  the  act  was  reported  by  the  Committee  on 
Finance,  its  chairman,  while  opposing  the  legal  tender  provi- 
sion, said:  "It  is  put  on  the  ground  of  absolute,  overwhelming 
necessity ;  that  the  Government  has  now  arrived  at  that  point 
when  it  must  have  funds,  and  those  funds  are  not  to  be  ob- 
tained from  ordinary  sources,  or  from  any  of  the  expedients  to 
which  we  have  heretofore  had  recourse,  and  therefore,  this  new, 
anomalous,  and  remarkable  provision  must  be  resorted  to  in 
order  to  enable  the  Government  to  pay  off  the  debt  that  it  now 
owes  and  afford  circulation  which  will  be  available  for  other 
purposes"  [Cong.  Globe,  1861-62,  Part  1,  764). 

And  ui^on  that  ground  the  provision  was  ado2ited,  some  of 
the  Senators  stating  that  iu  the  exigency  then  existing  money 
must  be  had,  and  they,  therefore,  sustained  the  measure,  al- 
though they  apju-ehended  danger  from  the  exiieriment.  "  The 
medicine  of  the  Constitution,"  said  Senator  Sumner,  "must 
not  become  its  daily  food  "  (id.,  800).  A  similar  necessity  was 
urged  upon  the  State  tribunals  and  this  court  iu  justification 
of  the  measure,  when  its  validity  was  questioned.  The  dissent- 
ing opinion  iu  Hepburn  vs.  Griswold  referred  to  the  pressure 


216  APPENDIX. 

that  was  upon  the  Government  at  the  time  to  enable  il  to  raise 
and  support  an  army  and  to  provide  and  maintain  a  navy. 
Chief  Justice  Chase,  who  gave  the  prevailing  opinion  in  that 
case,  also  spoke  of  the  existence  of  the  feeling  when  the  bill 
was  passed  that  the  i)ro\'i.sion  was  necessary.  He  favored  the 
provision  on  that  ground  when  Secretary  of  the  Treasuiy,  al- 
though he  had  come  to  that  conclusion  with  reluctance,  and 
recommended  its  adoption  by  Congress.  When  the  question  as 
to  its  validity  reached  this  couii,  this  expression  of  favor  was 
referred  to,  and  by  many  it  was  supposed  that  it  would  control 
his  judicial  action.  But  after  long  pondering  upon  the  sub- 
ject, after  listening  to  repeated  arguments  by  able  counsel,  ha 
decided  against  the  constitutionality  of  the  provision  ;  and, 
holding  in  his  hands  the  casting  vote,  he  determined  the  judg- 
ment of  the  court.  He  prefeiTed  to  ^jreserve  his  integrity  as  a 
judicial  officer  rather  than  his  consistency  as  a  statesman.  In 
his  oj^iuion  he  thus  referred  to  his  previous  Adews  : 

"It  is  not  surprising  that  amid  the  tumult  of  the  late  civil 
war,  and  under  the  influence  of  apprehensions  for  the  safety 
of  the  Republic  almost  universal,  different  views,  never  before 
entertained  by  American  statesmen  or  jurists,  were  adopted 
by  many.  The  time  was  not  favorable  to  considerate  reflec- 
tion upon  the  constitutional  limits  of  legislative  or  executive 
authority.  If  power  was  assumed  from  patriotic  motives,  the 
assumption  found  ready  justification  in  patriotic  hearts.  Many 
who  doubted  yielded  their  doubts  ;  many  who  did  not  doubt 
were  silent.  Some  who  were  strongly  averse  to  making  gov- 
ernment notes  a  legal  tender  felt  themselves  constrained  to 
acquiesce  in  the  views  of  the  advocates  of  the  measure.  Not  a 
few  who  then  insisted  upon  its  necessity,  or  acquiesced  in  that 
view,  have,  since  the  return  of  peace,  and  under  the  influence 
of  the  calmer  time,  reconsidered  their  conclusions,  and  nov/ 
concur  in  those  which  we  have  just  announced.  These  conclu- 
sions seem  to  us  to  be  fully  sanctioned  by  the  letter  and  spirit 
of  the  Constitution  "  (8  Wall.,  625). 

It  must  be  evident,  however,  ui:)on  reflection,  that  if  there 
were  any  power  in  the  Government  of  the  United  States  to 


APPENDIX.  217 

impart  the  quality  of  legal  tender  to  its  promissory  notes,  it 
Mius  I'or  Congress  to  determine  wlien  ilic  necessity  for  its  exer- 
cise existed  ;  that  war  merely  increased  the  urgency  for  money  ; 
it  did  not  add  to  the  powers  of  the  Government  nor  change 
their  nature  ;  that  if  the  power  existed  it  might  be  equally 
exercised  when  a  loan  was  made  to  meet  ordinary  expenses  in 
time  of  peace  as  when  vast  sums  were  needed  to  support  an 
army  or  a  navy  in  time  of  war.  The  wants  of  the  Government 
could  never  be  the  measure  of  its  powers.  But  in  the  excite- 
ment and  apprehensions  of  the  war  these  considerations  were 
unheeded  ;  the  measure  was  passed  as  one  of  overruling  neces- 
sity in  a  perilous  crisis  of  the  country.  Now,  it  is  no  longer 
advocated  as  one  of  necessity,  but  as  one  that  may  be  adopted 
at  any  time.  Never  before  was  it  contended  by  any  jui'ist  or 
commentator  on  the  Constitution  that  the  Government,  in  full 
receipt  of  ample  income,  with  a  treasury  overflowing,  with 
more  money  on  hand  than  it  knows  what  to  do  with,  covild 
issue  paper  money  as  a  legal  tender.  What  was,  in  1862,  called 
the  "medicine  of  the  Constitution,"  has  now  become  its  daily 
bread.  So  it  always  hajjpens  that  whenever  a  wrong  principle 
of  conduct,  political  or  personal,  is  adopted  on  a  plea  of  neces- 
sity, it  will  be  afterward  followed  on  a  plea  of  convenience. 

The  advocates  of  the  measure  have  not  been  consistent  in 
the  designation  of  the  power  upon  which  they  have  supported 
its  validity,  some  placing  it  on  the  power  to  borrow  money, 
some  on  the  coining  power,  and  some  have  claimed  it  as  an 
incident  to  the  general  powers  of  the  Government.  In  the 
present  case  it  is  jilaced  by  the  court  upon  the  power  to  bor- 
row money,  and  the  alleged  sovereignty  of  the  United  States 
over  the  currency.  It  is  assumed  that  this  power,  when  exer- 
cised by  the  Government,  is  something  different  from  what  it 
is  when  exercised  by  corjiorations  or  individuals,  and  that  the 
Government  has,  by  the  legal  tender  provision,  the  power  to 
enforce  loans  of  money  because  the  sovereign  governments  of 
European  countries  have  claimed  and  exercised  such  power. 

"  The  words  to  borrow  money,"  says  the  court,  "  are  not  to 
receive  that  limited  and  restricted  interpretation  and  meaning 

10 


218  APPENDIX. 

•which  they  would  have  in  a  penal  statute  or  in  an  authority 
coufeired  by  law  or  by  contract  uijon  trustees  or  agents  foi 
private  purposes."  And  it  adds  that  "  the  power,  as  incident 
to  the  power  of  borrowing  money  and  issuing  bills  or  notes  of 
the  Government  for  money  borrowed,  of  impressing  upon  those 
bills  or  notes  the  quality  of  being  a  legal  tender  for  the  pay- 
ment of  private  debts,  was  a  power  universally  understood  to 
belong  to  sovereignty,  in  Em-ope  and  America,  at  the  time  of 
the  framing  and  adoption  of  the  Constitution  of  the  United 
States.  The  governments  of  Europe,  acting  through  the  mon- 
arch or  the  legislature,  according  to  the  distribution  of  powers 
under  their  respective  constitiitions,  had  and  have  as  sovereign 
a  jjower  of  issuing  paper  money  as  of  stamping  coin,"  and  that 
"  the  exercise  of  this  power  not  being  prohibited  to  Congress 
by  the  Constitution,  it  is  included  in  the  power  expressly 
granted  to  borrow  money  on  the  credit  of  the  United  States." 

As  to  the  terms  to  hoi-roio  money,  where,  I  would  ask,  does 
the  court  find  any  authority  for  giving  to  them  a  different  in- 
terpretation in  the  Constitution  from  what  they  receive  when 
used  in  other  instruments,  as  in  the  charters  of  municijDal  bod- 
ies or  of  private  corporations,  or  in  the  contracts  of  individuals? 
They  are  not  ambiguous  ;  they  have  a  well-settled  meaning  in 
other  instiTiments.  If  the  court  may  change  that  in  the  Con- 
stitution, so  it  may  the  meaning  of  all  other  clauses,  and  the 
powers  which  the  Government  may  exercise  will  be  found  de- 
clared, not  by  plain  words  in  the  organic  law,  but  by  words 
of  a  new  significance  resting  in  the  minds  of  the  judges.  Until 
some  authority  beyond  the  alleged  claim  and  practice  of  the 
sovereign  governments  of  Euroj^e  be  jsroduced,  I  must  believe 
that  the  terms  have  the  same  meaning  in  all  instniments  wher- 
ever they  are  used  ;  that  they  mean  a  power  only  to  contract 
for  a  loan  of  money,  upon  considerations  to  be  agreed  between 
the  i^arties.  The  conditions  of  the  loan,  or  whether  any  particu- 
lar security  shall  be  given  to  the  lender,  are  matters  of  arrange- 
ment between  the  parties  ;  they  do  not  concern  any  one  else. 
They  do  not  imply  that  the  borrower  can  give  to  his  jjromise  to 
refund  the  money  any  security  to  the  lender  outside  of  property 


APPENDIX:  219 

or  rights  which  he  possesses.  The  transaction  is  completed 
when  the  lender  parts  with  his  money  and  the  borrower  gives 
his  promise  to  pay  at  the  time,  and  in  the  manner,  and  with  the 
securities  agreed  upon.  Whatever  stipulations  may  be  made 
to  add  to  the  value  of  the  jjromise  or  to  seci;re  its  fulfilment, 
must  necessarily  be  limited  to  the  jjroperty,  rights,  and  priv- 
ileges which  the  borrower  possesses.  Whether  he  can  add  to 
his  jjromises  any  element  which  will  induce  others  to  receive 
them  beyond  the  security  which  he  gives  for  their  payment, 
depends  upon  his  power  to  control  sitcli  element.  If  he  has  a 
right  to  put  a  limitation  upon  the  use  of  other  jiersons'  prop- 
erty, or  to  enforce  an  exaction  of  some  benefit  from  them,  he 
may  give  such  pri^'ilege  to  the  lender  ;  but  if  he  has  no  right 
thus  to  interfere  with  the  projierty  or  possessions  of  others,  of 
course  he  can  give  none.  It  will  hardly  be  pretended  that  the 
Government  of  the  United  States  has  any  power  to  enter  into 
an  engagement  that,  as  security  for  its  notes,  the  lender  shall 
have  special  i^rivileges  with  respect  to  the  visible  property  of 
others,  shall  be  able  to  occupy  a  portion  of  their  lands  or  their 
houses,  and  thus  interfere  with  the  possession  and  use  of  their 
property.  If  the  Government  cannot  do  that,  how  can  it  step 
in  and  say,  as  a  condition  of  loaning  money,  that  the  lender 
shall  have  a  right  to  interfere  with  contracts  between  private 
parties  ?  A  large  proj^ortion  of  the  property  of  the  world  ex- 
ists in  contracts,  and  the  Government  has  no  more  right  to  de- 
prive one  of  their  value  by  legislation  operating  directly  upon 
them,  than  it  has  a  right  to  deprive  one  of  the  value  of  any 
visible  and  tangible  property.  No  one,  I  think,  will  pretend 
that  individuals  or  corporations  possess  the  power  to  impart  to 
their  evidences  of  indebtedness  any  quality  by  which  the  holder 
will  be  able  to  affect  the  contracts  of  other  jjarties,  strangers  to 
the  loan  ;  nor  would  any  one  pretend  that  Congress  possesses 
the  power  to  impart  any  such  quality  to  the  notes  of  the 
United  States,  except  from  the  clause  authorizing  it  to  make 
laws  necessary  and  proper  to  the  execution  of  its  powers.  That 
clause,  however,  does  not  enlarge  the  expressly  designated 
powers  ;  it  merely  states  what  Congress  could  have  done  with- 


220  APPENDIX. 

out  its  insertion  in  the  Constitntion.  Without  it  Oongivps 
could  have  adoptotl  any  apprdpriate  moans  to  borrow  ;  but  tliat 
can  only  be  apiuopriate  lor  that  purpose  which  has  some  rela- 
tion of  fitness  to  the  end,  ■which  has  respect  to  the  terms  essen- 
tial to  the  contract,  or  to  the  securities  which  the  borrower 
may  furnish  for  the  repayment  of  the  loan.  The  quality  of 
legal  tender  does  not  touch  the  terms  of  the  contract ;  that  is 
complete  without  it  ;  nor  does  it  stand  as  a  security  for  the  loan, 
for  a  security  is  a  thing  jjledged  over  which  the  borrower  has 
some  control,  or  in  which  he  holds  some  interest. 

The  argument  presented  by  the  advocates  of  legal  tender  is, 
in  substance,  this  :  The  object  of  borrowing  is  to  raise  funds  ; 
the  addition  of  the  qiiality  of  legal  tender  to  the  notes  of  the 
Government  will  induce  parties  to  take  them,  and  funds  will 
thereby  be  more  readily  loaned.  But  the  same  thing  may  be 
said  of  the  addition  of  any  other  quality  which  would  give  to 
the  holder  of  the  notes  some  advantage  over  the  property  of 
others,  as,  for  instance,  that  the  notes  should  serve  as  a  pass  on 
the  public  conveyances  of  the  country,  or  as  a  ticket  to  jilaces 
of  amusement,  or  should  exempt  his  property  from  State  and 
municipal  taxation,  or  entitle  him  to  the  free  use  of  the  tele- 
gTaph  lines,  or  to  a  percentage  from  the  revenues  of  private 
coii^orations.  The  same  consequence,  a  ready  acceptance  of 
the  notes,  would  follow  ;  and  yet  no  one  would  pretend  that  the 
addition  of  pri-vileges  of  this  kind  with  respect  to  the  jn-operty 
of  others,  over  which  the  borrower  has  no  control,  would  be  in 
any  sense  an  appropriate  measiu'e  to  the  execution  of  the  power 
to  borrow. 

Undoubtedly  the  power  to  borrow  includes  the  power  to  give 
e^^dences  of  the  loan  in  bonds,  treasury  notes,  or  in  such  other 
form  as  may  be  agi'eed  between  the  parties.  These  may  be  issued 
in  such  amounts  as  will  fit  them  for  cii'culation,  and  lor  that 
pui-pose  may  be  made  payable  to  bearer,  and  transferable  by 
delivery.  Experience  has  shown  that  the  form  best  fitted  to 
secure  their  ready  acceptance  is  that  of  notes  jjayable  to  bearer 
in  such  amounts  as  may  suit  the  ability  of  the  lender.  The 
Government,  in  substance,  says  to  j^arties  with  whom  it  deals  ; 


APPENDIX.  221 

Lend  lis  jonr  money,  or  fnrnisli  ns  with  your  products  or  your 
liil^or,  and  we  will  ultiuuitely  pay  you,  and  as  evidence  of  it  -vve 
will  give  you  our  notes,  in  such  form  and  amount  as  may  suit 
your  convenience,  and  enable  you  to  transfer  them ;  we  will 
also  receive  them  for  certain  demands  due  to  us.  In  all  this 
matter  there  is  only  a  dealing  between  the  Government  and  tha 
individuals  who  trust  it.  The  transaction  concerns  no  others. 
The  power  which  authorizes  it  is  a  very  different  one  from  a 
power  to  deal  between  parties  to  i^rivate  contracts  in  which  the 
Government  is  not  interested,  and  to  compel  the  receipt  of  these 
promises  to  pay  in  place  of  the  money  for  which  the  contracts 
stipiilated.  This  latter  power  is  not  an  incident  to  the  former  ; 
it  is  a  distinct  and  fai'  greater  power.  There  is  no  legal  con- 
nection between  the  two  ;  between  the  power  to  borrow  from 
those  willing  to  lend  and  the  power  to  interfere  with  the  inde- 
pendent contracts  of  others.  The  possession  of  this  latter 
power  would  justify  the  interference  of  the  Government  with 
any  rights  of  property  of  other  parties,  under  the  pretence 
that  its  allowance  to  the  holders  of  the  notes  would  lead  to 
their  more  ready  acceptance,  and  thus  fiu-nish  the  needed 
means. 

The  i^ower  vested  in  Congress  to  coin  money  does  not  in  my 
judgment  fortify  the  j)osition  of  the  court  as  its  opinion  affirms. 
So  far  from  deducing  from  that  power  any  authority  to  impress 
the  notes  of  the  Government  with  the  quality  of  legal  tender, 
its  existence  seems  to  me  inconsistent  with  a  power  to  make 
anything  but  coin  a  legal  tender.  The  meaning  of  the  terms 
"  to  coin  money  "  is  not  at  all  doubtful.  It  is  to  mould  metallic 
substances  into  forms  convenient  for  circulation  and  to  stamp 
them  with  the  impress  of  the  Government  authority  indicating 
their  value  with  reference  to  the  unit  of  value  established  by 
law.  Coins  are  pieces  of  metal  of  definite  weight  and  value, 
stamped  such  by  the  authority  of  the  Government.  If  any 
doubt  could  exist  that  the  power  has  reference  to  metallic  sub- 
stances only  it  would  be  removed  by  the  language  which  im- 
mediately follows,  authorizing  Congress  to  regulate  the  value 
of  money  thus  coined  and  of  foreign  coin,  and  also  by  clauses 


222  APPENDIX. 

making  a  distinction  between  coin  and  the  obligations  of  the 
general  Govornnient  and  of  the  States.  Thus,  in  the  t-lause 
authorizing  Congress  "to  provide  for  the  punishment  of  coun- 
terfeiting the  securities  and  current  coin  of  the  United  States," 
a  distinction  is  made  between  the  obligations  and  the  coin  of 
th3  Government. 

Money  is  not  only  a  medium  of  exchange,  but  it  is  a  standard 
of  value.  Nothing  can  be  such  standard  which  has  not  intrin- 
sic value,  or  which  is  subject  to  frequent  changes  in  value. 
From  the  earliest  period  in  the  histoiy  of  civilized  nations,  we 
find  pieces  of  gold  and  silver  used  as  money.  These  metals  are 
scattered  over  the  world  in  small  quantities  ;  they  are  siiscepti- 
ble  of  di\'ision,  capable  of  easy  impression,  have  more  value  in 
l^roportion  to  weight  and  size,  and  are  less  subject  to  loss  by 
wear  and  abrasion  than  ^any  other  material  possessing  these 
qualities.  It  requires  labor  to  obtain  them ;  they  are  not  de- 
pendent upon  legislation  or  the  cai:>rices  of  the  multitude ;  they 
cannot  be  manufactured  or  decreed  into  existence,  and  they  do 
not  peiish  by  lapse  of  time.  They  have,  therefore,  naturally, 
if  not  necessarily,  become  throughout  the  world  a  standard  of 
value.  In  exchange  for  pieces  of  them,  products  requiring  an 
equal  amount  of  labor  are  readily  given.  When  the  product 
and  the  piece  of  metal  rej^resent  the  same  labor,  or  an  approxi- 
mation to  it,  they  are  freely  exchanged.  There  can  be  no  ade- 
quate substitute  for  these  metals.  Says  Mr.  Webster,  in  a 
speech  made  in  the  House  of  Representatives  in  1815  : 

"  The  circulating  medium  of  a  commercial  community  must 
be  that  which  is  also  the  circulating  medium  of  other  commer- 
cial communities,  or  must  be  capable  of  being  converted  into 
that  medium  without  loss.  It  must  also  be  able,  not  only  to 
pass  in  payments  and  receipts  among  individuals  of  the  same 
society  and  nation,  but  to  adjust  and  discharge  the  balance  of 
exchanges  between  different  nations.  It  must  be  something 
which  has  a  value  abroad  as  well  as  at  home,  by  which  foreign 
as  well  as  domestic  debts  can  be  satisfied.  The  precious 
metals  alone  answer  these  purposes.  They  alone,  therefore, 
are  money,  and  whatever  else  is  to  perform  the  functions  of 


APPENDIX.  223 

money  must  be  thoir  representative,  and  capable  of  being 
tnrnetl  into  them  at  will.  So  long  as  bank  pajjer  retains  this 
quality  it  is  a  substitute  for  money ;  divested  of  this,  nothing 
can  give  it  that  character  "  (3  Webster's  Works,  41). 

The  clause  to  coin  money  must  be  read  in  connection  with 
the  jDrohibition  ui)on  the  States  to  make  anything  but  gold 
and  silver  coin  a  tender  in  payment  of  debts.  The  two  taken 
together  clearly  show  that  the  coins  to  be  fabricated  under  tho 
authority  of  the  general  Government,  and  as  such  to  be  a  legal 
tender  for  debts,  are  to  be  composed  principally,  if  not  entirely, 
of  the  metals  of  gold  and  silver.  Coins  of  such  metals  are 
necessarily  a  legal  tender  to  the  amount  of  their  respective 
values  without  any  legislative  enactment,  and  the  statute  of 
the  United  States  providing  that  they  shall  be  such  tender 
is  only  declaratory  of  their  effect  when  offered  in  payment. 
When  the  Constitution  says,  therefore,  that  Congress  shall  have 
the  power  to  coin  money,  interijreting  that  clause  with  the  pro- 
hibition upon  the  States,  it  says  it  shall  have  the  power  to 
make  coins  of  the  precious  metals  a  legal  tender,  for  that  alone 
which  is  money  can  be  a  legal  tender.  If  this  be  the  true  im- 
jjorfc  of  the  language,  nothing  else  can  be  made  a  legal  tender. 
We  all  know  that  the  value  of  the  notes  of  the  Government  in 
the  market,  and  in  the  commercial  world  generally,  depends 
upon  their  convertibility  on  demand  into  coin  ;  and  as  confi- 
dence in  such  convertibility  increases  or  diminishes,  so  does 
the  exchangeable  value  of  the  notes  vary.  So  far  from  becom- 
ing themselves  standards  of  value  by  reason  of  the  legislative 
declaration  to  that  effect,  their  own  value  is  measured  by  the 
facility  with  which  they  can  be  exchanged  into  that  which 
alone  is  regarded  as  money  by  the  commercial  world.  They 
are  promises  of  money,  but  they  are  not  money  in  the  sense  of 
the  Constitution.  The  term  money  is  used  in  that  instrument 
in  several  clauses ;  in  the  one  authorizing  Congress  "  to  borrow 
money;"  in  the  one  authorizing  Congress  "to  coin  money;" 
in  the  one  declaring  that  "  no  money  "  shall  be  drawn  from  the 
treasuiy  but  in  consequence  of  appropriations  made  by  law ; 
and  in  the  one  declaring  that  no   State  shall  "  coin  money." 


224  APPENDIX. 

And  it  is  a  Rottlocl  rule  of  interpretation  that  the  same  term 
occurring  in  dill'ereut  parts  of  the  same  instrument  shall  ba 
taken  in  the  same  sense,  unless  there  be  something  in  the  con- 
text indicating  that  a  different  meaning  was  intended.  Now, 
to  coin  money  is,  as  I  have  said,  to  make  coins  out  of  metallic 
substances,  and  the  only  money  the  value  of  which  Congress 
can  regulate  is  coined  money,  either  of  our  mints  or  of  foreign 
countries.  It  should  seem,  therefore,  that  to  borrow  money  is  to 
obtain  a  loan  of  coined  money,  that  is,  money  composed  of  the 
jjrecious  metals,  representing  value  in  the  purchase  of  property 
and  payment  of  debts.  Between  the  promises  of  the  Govern- 
ment, designated  as  its  securities,  and  this  money,  the  Constitu- 
tion di'aws  a  distinction,  which  disappears  in  the  opinion  of  the 

COUl't. 

The  opinion  not  only  declares  that  it  is  in  the  power  of  Con- 
gress to  make  the  notes  of  the  Government  a  legal  tender  and 
a  standard  of  value,  but  that  under  the  power  to  coin  money 
and  regulate  the  value  thereof,  Congress  may  issue  coins  of  the 
same  denominations  as  those  now  already  current,  but  of  less 
intrinsic  value,  by  reason  of  containing  a  less  weight  of  the 
precious  metals,  and  thereby  enable  debtors  to  discharge  their 
debts  by  payment  of  coins  of  less  real  value.  This  doctrine  is 
put  forth  as  in  some  way  a  justification  of  the  legislation 
authorizing  the  tender  of  nominal  money  in  jslace  of  real  money 
in  payment  of  debts.  Undoubtedly  Congress  has  power  to 
alter  the  value  of  coins  issued,  either  by  increasing  or  diminish- 
ing the  alloy  they  contain ;  so  it  may  alter,  at  its  pleasui'e,  their 
denominations ;  it  may  hereafter  call  a  dollar  an  eagle,  and  it 
may  call  an  eagle  a  dollar.  But  if  it  be  intended  to  assert  that 
Congress  can  make  the  coins  changed  the  equivalent  of  those 
ha^ang  a  greater  value  in  their  previous  condition,  and  compel 
parties  contracting  for  the  latter  to  receive  coins  with  diminished 
value,  I  must  be  permitted  to  deny  any  such  authority.  Any 
such  declaration  on  its  j^art  would  be  not  only  utterly  inopera- 
tive in  fact,  but  a  shameful  disregard  of  its  constitutional  duty. 
As  I  said  on  a  former  occasion  :  "  The  power  to  coin  money, 
as  declared  by  this  court,  is  a  great  trust  devolved  upon  Con- 


ArrENDIX.  '225 

gress,  carrying  with  it  the  duty  of  creating  and  maintaining  a 
uniform  standard  of  value  throughout  the  Union,  and  it  would 
be  a  manifest  abuse  of  this  trust  to  give  to  the  coins  issued 
by  its  authority  any  other  than  their  real  value.  By  debasing 
the  coins,  when  once  the  standard  is  fixed,  is  meant  giving  to 
tlie  coins,  by  their  form  and  impress,  a  certificate  of  their  having 
a  relation  to  tbat  standard  different  from  that  which,  in  truth, 
they  possess  ;  in  other  words,  giving  to  the  coins  a  false  certifi- 
cate of  their  value.  Arbitrary  and  profligate  governments 
have  often  resorted  to  this  miserable  scheme  of  robbery,  which 
Mill  designates  as  a  shallow  and  impudent  artifice,  the  '  least 
covert  of  all  modes  of  knavery,  which  consists  in  calling  a 
ehilling  a  pound,  that  a  debt  of  one  hundred  pounds  may  be 
cancelled  by  the  payment  of  one  hundred  shillings.'  "  No  such 
debasement  has  ever  been  attempted  in  this  country,  and  none 
ever  will  be  so  long  as  any  sentiment  of  honor  influences  the 
governing  jjower  of  the  nation.  The  changes  from  time  to  time 
in  the  quantity  of  alloy  in  the  different  coins  have  been  made 
to  preserve  the  proper  relative  value  between  gold  and  silver,  or 
to  prevent  exportation,  and  not  with  a  view  of  debasing  them. 
Whatever  j)ower  may  be  vested  in  the  Government  of  the  United 
States,  it  has  none  to  perpetrate  such  monstrous  iniqiiity.  One 
of  the  great  purposes  of  its  creation,  as  expressed  in  the  i^reamble 
of  the  Constitution,  was  the  establishment  of  justice,  and  not  a 
line  nor  a  word  is  found  in  that  instrument  which  sanctions  any 
intentional  wrong  to  the  citizen,  either  in  war  or  in  peace. 

But  beyond  and  above  all  the  objections  which  I  have  stated 
to  the  decision  recognizing  a  power  in  Congi-ess  to  impart  the 
legal-tender  quality  to  the  notes  of  the  Government,  is  my 
objection  to  the  rule  of  construction  adopted  by  the  court  to 
reach  its  conclusions,  a  rule  which,  fully  carried  out,  would 
change  the  whole  nature  of  our  Constitution  and  break  down 
the  barriers  which  separate  a  government  of  limited  from  one 
of  unlimited  powers.  When  the  Constitution  came  before  the 
conventions  of  the  several  States  for  adoption,  apprehension 
existed  that  other  powers  than  those  designated  might  be 
claimed  ;  and  it  led  to  the  first  ten  amendments.     When  these 

lU* 


220  APPENDIX. 

were  iivesented  to  the  States  they  wore  preceded  by  a  preamhle 
stating  that  the  conventions  of  a  number  of  the  States  had,  at 
the  time  of  adopting  the  Constitution,  expressed  a  desire,  "  in 
order  to  prevent  misconception  or  abuse  of  its  powers,  that 
further  deehxratory  and  restrictive  clauses  should  be  added." 
One  of  them  is  found  in  the  tenth  amendment,  which  declares 
that  "  the  powers  not  delegated  to  the  United  States  by  the 
Constitution,  nor  prohibited  by  it  to  the  States,  are  reserved  to 
the  States  respectively,  or  to  the  peoi^le."  The  framers  of  the 
Constitution,  as  I  have  said,  were  profoundly  impressed  with 
the  evils  which  had  resulted  from  the  vicious  legislation  of  the 
States  making  notes  a  legal  tender,  and  they  determined  that 
such  a  power  should  not  exist  any  longer.  They  therefore 
prohibited  the  States  from  exercising  it,  and  they  refused  to 
grant  it  to  the  new  government  which  they  created.  Of  what 
purpose  is  it,  then,  to  refer  to  the  exercise  of  the  power  by  the 
absolute  or  the  limited  governments  of  Europe,  or  by  the  States 
previous  to  our  Constitution  ?  Congress  can  exercise  no  j^ower 
by  virtue  of  any  siipposed  inherent  sovereignty  in  the  general 
Government.  Indeed,  it  may  be  doubted  whether  the  power 
can  be  correctly  said  to  appertain  to  sovereignty  in  any  ^jroper 
sense  as  an  attribiite  of  an  independent  political  community. 
The  power  to  commit  violence,  perj^etrate  injustice,  take  jiri- 
vate  property  by  force  without  compensation  to  tlie  owner,  and 
compel  the  receipt  of  promises  to  pay  in  place  of  money,  may 
be  exercised,  as  it  often  has  been,  by  irresi^onsible  authority, 
but  it  cannot  be  considered  as  belonging  to  a  government 
founded  upon  law.  But  be  that  as  it  may,  there  is  no  such 
thing  as  a  power  of  inherent  sovereignty  in  the  Government  of 
the  United  States.  It  is  a  governmant  of  delegated  powers, 
supreme  within  its  prescribed  sphere,  but  jjowerless  outside  of 
it.  In  this  coimtry  sovereignty  resides  in  the  people,  and  Con- 
gress can  exercise  no  power  which  they  have  not,  by  their 
Constitution,  entnisted  to  it ;  all  else  is  withheld.  It  seems, 
however,  to  be  supposed  that,  as  the  power  was  taken  from 
the  States,  it  coiild  not  have  been  intended  that  it  should  dis- 
appear entirely,  and  therefore  it  must  in  some  way  adhere  to 


APPENDIX.  227 

the  general  Government,  notwithstanding  the  tenth  amend- 
ment and  the  nature  of  the  Constitution.  The  doctrine,  that 
a  power  not  expressly  forbidden  may  be  exercised,  would,  as  I 
have  observed,  change  the  character  of  our  Government.  If  I 
have  read  the  Constitution  aright,  if  there  is  any  weight  to  be 
given  to  the  uniform  teachings  of  our  great  jurists  and  of  com- 
mentators previous  to  the  late  civil  war,  the  true  doctrine  is 
the  very  opposite  of  this.  If  the  power  is  not  in  terms  granted, 
and  is  not  necessary  and  proper  for  the  exercise  of  a  power 
which  is  thus  granted,  it  does  not  exist.  And  in  determining 
Avhat  measures  may  be  adojited  in  executing  the  powers  granted, 
Chief-Justice  Marshall  declares  that  they  must  be  appropriate, 
l^lainly  adapted  to  the  end,  not  jjrohibited,  and  consistent  icith 
the  letter  and  spirit  of  the  Constitution.  Now,  all  through  that 
instmment  we  find  limitations  upon  the  jDower,  both  of  the  gen- 
eral Government  and  the  State  Governments,  so  as  to  prevent 
oj^pression  and  injustice.  No  legislation,  therefore,  tending  to 
l^romote  either  can  consist  with  the  letter  and  spirit  of  the  Consti- 
tution. A  law  which  interferes  with  the  contracts  of  others  and 
compels  one  of  the  parties  to  receive  in  satisfaction  something 
different  from  that  stipulated,  without  reference  to  its  actual 
value  in  the  market,  necessarily  works  such  injustice  and  wrong. 
There  is,  it  is  true,  no  provision  in  the  Constitution  of  the 
United  States  forbidding  in  direct  terms  the  passing  of  laws 
by  Congress  impairing  the  obligation  of  contracts,  and  there 
are  many  express  jsowers  conferred,  such  as  the  power  to  de- 
clare war,  levy  duties,  and  regTilate  commerce,  the  exercise 
of  which  affects  more  or  less  the  value  of  contracts.  Thus  war 
necessarily  suspends  intercourse  between  citizens  or  subjects 
of  belligerent  nations,  and  the  jierformance  during  its  con- 
tinuance of  previous  contracts.  The  imposition  of  duties  upon 
goods  may  affect  the  prices  of  articles  imported  or  manufac- 
tured, so  as  to  materially  alter  the  value  of  previous  contracts 
respecting  them.  But  these  incidental  consequences  arising 
from  the  exercise  of  such  jiowers  were  contemplated  in  the 
grant  of  them.  As  there  can  be  no  solid  objection  to  legis- 
lation under  them,  no  just  complaint  can  be  made  of  such  con- 


228  APPENDIX. 

Beqxiences.  But  fai'  difTeront  is  tlie  case  when  tlie  impairment 
of  the  contract  does  not  follow  incidentally,  but  is  dii'ectly  and 
in  terms  allowed  and  enacted.  Legislation  operating  directly 
upon  private  contracts,  changing  their  conditions,  is  forbidden 
to  the  States  ;  and  no  power  to  alter  the  stipulations  of  such 
contracts  by  direct  legislation  is  conferred  upon  Congress. 
There  are  also  many  considerations,  outside  of  the  fact  that 
there  is  no  grant  of  the  power,  which  show  that  the  framers  of 
the  Constitution  never  intended  that  such  power  should  be 
exercised.  One  of  the  gi-eat  objects  of  the  Constitution,  as  al- 
ready obsei"ved,  was  to  establish  justice,  and  what  was  meant 
by  that  in  its  relations  to  contracts,  as  said  by  the  late  Chief 
Justice  in  his  opinion  in  Hei^burn  vs.  Griswold,  was  not  left  to 
inference  or  conjecture.  And  in  support  of  this  statement  he 
refers  to  the  fact  that  when  the  Constitution  was  undergoing 
discussion  in  the  convention,  the  Congress  of  the  Confedera- 
tion was  engaged  in  framing  the  ordinance  for  the  government 
of  the  Northwest  Territory,  in  which  certain  articles  of  com- 
pact were  established  between  the  people  of  the  original  States 
and  the  i^eople  of  the  Territoiy  for  the  purpose,  as  expressed 
in  the  instrument,  "  of  extending  the  fundamental  i^rinciples 
of  civil  and  religious  libeiiy,  whereon  these  republics  [the 
States  united  under  the  confederation],  their  laws  and  constitu- 
tions are  erected."  That  Congress  was  also  alive  to  the  evils 
which  the  loose  legislation  of  the  States  had  created  by  inter- 
fering with  the  obligation  of  private  contracts  and  making  notes 
a  legal  tender  for  debts  ;  and  the  ordinance  declared  that  in 
the  just  jjreservation  of  rights  and  j)roperty  no  law  "  ought 
ever  to  be  made,  or  have  force  in  the  said  Teridtoiy,  that  shall 
in  any  manner  whatever  interfere  with  or  r.fifect  private  con- 
tracts, or  engagements,  bona  fide  and  without  fraud,  previously 
formed."  This  principle,  said  the  Chief  Justice,  found  more 
condensed  expression  in  the  prohibition  upon  the  States  against 
impairing  the  obligation  of  contracts,  which  has  always  been 
recognized  "  as  an  efficient  safeguard  against  injustice  ;  "  and 
the  coxirt  was  then  of  opinion  that  "  it  is  clear  that  those  who 
framed  and  those  who  adopted  the  Constitution  intended  that 


APPENDIX.  220 

the  spirit  of  this  prohibition  should  pei-vade  the  entire  body  of 
legiskxtion,  and  that  the  justice  which  the  Constitution  was 
ordained  to  establish  was  not  thought  by  them  to  be  coni- 
palible  with  legislation  of  an  opposite  tendency."  Soon  after 
the  Constitution  was  adopted  the  case  of  Calder  vs.  Bull  came 
before  this  court,  and  it  was  there  said  that  there  were  acts 
which  the  Federal  and  State  legislatures  could  not  do  without 
exceeding  their  authority ;  and  among  them  was  mentioned  a 
law  which  jjunished  a  citizen  for  an  innocent  act,  and  a  law 
which  destroyed  or  impaired  the  lawful  private  contracts  of 
citizens.  "It  is  against  all  reason  and  justice,"  it  was  added, 
' '  for  a  peojDle  to  entrust  a  legislature  with  such  powers,  and, 
therefore,  it  cannot  be  presumed  that  they  have  done  it "  (3 
Dallas,  388).  And  Mr.  Madison,  in  one  of  the  ai-ticles  in  the 
Federalist,  declared  that  laws  impairing  the  obligation  of  con- 
tracts were  contrary  to  the  first  principles  of  the  social  com- 
pact, and  to  every  principle  of  sound  legislation.  Yet  this 
court  holds  that  a  measm-e  directly  operating  upon  and  neces- 
sarily impairing  private  contracts,  may  be  adopted  in  the  execu- 
tion of  powers  specifically  granted  for  other  pui'poses,  because 
it  is  not  in  terms  prohibited,  and  that  it  is  consistent  with  the 
letter  and  spirit  of  the  Constitiition. 

From  the  decision  of  the  court  I  see  only  evil  likely  to  fol- 
low. There  have  been  times  within  the  memory  of  all  of  us 
when  the  legal-tender  notes  of  the  United  States  were  not 
exchangeable  for  more  than  one-half  of  their  nominal  value. 
The  possibility  of  such  depreciation  will  always  attend  paper 
money.  This  inborn  infirmity  no  mere  legislative  declaration 
can  cure.  If  Congress  has  the  power  to  make  the  notes  a  legal 
tender  and  to  pass  as  money  or  its  equivalent,  why  should  not 
a  sufficient  amount  be  issued  to  pay  the  bonds  of  the  United 
States  as  they  mature  ?  "Why  pay  interest  on  the  millions  of 
dollars  of  bonds  now  due,  when  Congress  can  in  one  day  make 
the  money  to  pay  the  principal  ?  And  why  should  there  be 
any  restraint  upon  unlimited  appropriations  by  the  Government 
for  all  imaginary  schemes  of  public  improvement,  if  the  print- 
ing-press can  furnish  the  money  that  is  neeeled  for  them  ? 


INDEX, 


Accumulation  of  notes  in  Treasury, 
45. 

Action  of  Piirliamont  in  1720,  ,1 ;  of 
Parliament  in  17  tU,  o  ;  of  Parlia- 
ment in  1751,  o;  of  Colonies,  o  ; 
of  Continental  Congress,  9 ;  of 
Federal  Convention,  13. 

Acti  m,  Congressional.     See  Acts. 

Action  of  States  in  regard  to  sur- 
plus, 181. 

Acts  of  Parliament  prohibiting 
paper  money  in  Colonies,  of  1720, 
3;  of  1740,  o;  of  1751,  :;  ;  for 
issue  of  Treasury  notes,  of  June 
30,  1812,  2U;  of  February  2.5, 
1813,  29;  of  March  14,  1814,  30; 
of  December  2(i,  1814,  30  ;  of  Feb- 
ruary 24,  1815,  33;  of  October  1. 
1837,  42;  of  May  1,  1838,  45;  of 
March  2,  1839,  45  ;  of  March,  31, 
1840,  4(5;  of  February  15,  1841, 
49;  of  January  31,  1843,  51;  of 
August  31.  1842,  51  ;  of  March  3, 
184  J,  51  ;  of  July  22,  1846,  04  ;  of 
January  28,  1847,  (YJ  ;  of  Decem- 
ber 23.  1857,  70  ;  of  December  17, 
18fi0,  75. 

Acts  authorizing  Treasury  notes,  of 
March  2,  1861,  79. 

Acts  authorizing  7-30  notes,  of  July 
17,  1861,  88;  of  August  5,  1861, 
88 ;  of  June  30,  1864,  97 ;  of  March 
3,  1865,  97. 

Acts  authorizing  demand  notes,  of 
July  17,  1801,  88;  of  August  5, 
1861,  88. 

Acts,  miscellaneous,  of  June  22, 
18(;0,  72  ;  of  February  8,  1861,  79  ; 
postal  note,  100  ;  prohibiting  shin- 
plasters,   103 ;    for    retiring    7-30 


notes,  113;  authorizing  four  per 
cent,  ccrtiticatts,  1 17 ;  authorizing 
additional  issue  bank  circulation, 
114;  authorizing  issue  of  legal  ten- 
ders, 136,  138  ;  authorizing  issue  of 
gold  certificates,  115;  authorizing 
issue  of  legal-tender  note  cer- 
tificates, 116;  authorizing  cancel- 
lation of  legal  tenders,  140  ;  repeal- 
ing right  to  fund  legal-tender 
notes,  138 ;  for  resumption  of 
specie  payments,  141  ;  removing 
restrictions  as  to  limit  of  issue  of 
National  bank  notes,  140  ;  coinage 
of  1792,  148;  of  1873,  149;  au- 
thorizing silver  dollars,  152 ;  au- 
thorizing silver  ceitificates,  152 ; 
regulating  deposits  with  State 
banks,  Vt2  \  authorizing  deposit  of 
surplus  money  with  the  States,  172. 

Adams,  John  Qiiincy,  opposes  post- 
ponement bill,  187. 

Additional  issue  of  notes,  30. 

Administration,      Harrison's,      49 
Van    Burin's,    50;     Tyler's,     53 
Buchanan's,    71;    Lincoln's,    117 
Jackson's,  represented  by  Benton 
in  Senate,  176  ;  Hayes',  150. 

Advances  made  by  banks  to  Govern- 
ment, 96. 

Advantages  to  banks  in  placing  7-30 
notes,  94. 

Allegations  of  favoritism  to  banks, 
29,  175. 

Alley,  John  B.  B,emarks  on  legal- 
t-nder  bill,  12.5. 

Amendment  to  Constitution  to  per- 
mit distribution  of  siuplus,  sug- 
gesteil  by  Jackson,  169. 

Amount  of   Treasury  notes  author 


232 


INDEX. 


kcd  in  1812,  LTi ;  of  bank  currency, 
;>1  ;  of  Treasury  notes  outstand- 
ing iu  IS14.  31  ;  of  notes  author- 
i'.ed,  4"3  ;  largest  outstanding  at 
any  one  time,  45 ;  amount  out- 
standing at  advent  of  Harrison's 
administration,  50  ;  issued  under 
Act  of  Februarv,  1841,  4'J;  of  notes 
issued  fi-om  iS3T  to  1841,  49; 
notes  falling  due  dtiringyear  184o, 
51  ;  of  loan  of  184(5,  (14  ;  issues  and 
reissues  under  Act  of  1847,  C9 ; 
Treasury  notes  outstanding  in  18G0, 
71  ;  in  1884,  71  ;  of  Treasury  notes 
issued  under  the  Act  of  March  2, 
18t)l,  79;  of  7-30  notes  taken  by 
New  York  bankers,  9o;  of  fraction- 
al cun-ency  issued,  104  ;  of  surplus 
due  from  States  carried  as  una- 
vailable on  Treasury  books,  188  ; 
authorized  under  v  irious  Acts,  52. 

Anticipation  of  revenues  by  u&e  of 
Treasury  notes,  41). 

Antipathy  to  paper  money,  10. 

Anxiety  to  obtain  fractional  cur- 
rency, 104. 

Apportionment  of  deposit  banks 
among  States,  182. 

Apportionment  of  surplus  revenue 
among  States,  recommended  by 
Jackson,  169;  opposed  by  Jackson, 
171  ;  basis  of,  180. 

Appropriation  of  public  money  for 
improvements  thought  unconsti- 
tutional, 169 ;  required  to  take 
surplus  from  Treasr.rj-,  189. 

Approval  of  bills.     See  Acts. 

Arguments  for  and  against  Treasury 
notes  in  1812,  22;  in  1813,  ^9;  iu 
1814-15,  31 ;  in  18:;7,  41 ;  in  18:J8, 
43;  in  1840,  46;  in  1842,  51  ;  of 
Committee  of  Ways  and  Means  in 
1844,  against  Treasury  notes,  54  ; 
in  Federal  Convention,  14;  in  1802, 
125 ;  in  legal-tender  cases,  150- 
166  ;  relative  to  distribution  of  sur- 
plus, for  and  against,  in  1829,  111  ; 
in  1835,  172  ;  of  Jackson's  oppo- 
nents, 175  ;  of  Ben tou, against,  177; 
for  and  against  po.'itponemeiit  of 
fourth  instalment,  183-188. 

Arrangements  with  New  York  banks 
for  placing  7-30  loan,  93. 

Attorney  General  Bates'  opinion  as 
to  legal  tender,  121. 


Authority  to  issue  bills,  States  de- 

j)rivcd  of,  10. 
Authority  to  coin  money,  States  de- 

{)nved  of,  10. 
Available   balance    in   Treasury    at 

various  dates,  I'll. 


Banks,  land,  proposed  by  John 
Coleman,  1  ;  deteat  of  laud,  2 ; 
paper  money,  under  auspices  of 
Treasury,  2  ;  loan  of  mercliants  of 
Boston,  2  ;  second  land,  proposed 
by  Coleman,  2 ;  plan  of,  3 ;  oppose  1 
by  Governor  Belcher,  3;  Hutchi- 
son's .'■pei  ie,  o ;  charter  of,  liy 
Stares,  11  ;  power  of  Congress  to 
create,  to  circulate  bills,  11  ;  Na- 
tional r&c(  mmencled,  31  ;  Second, 
of  United  States,  41  ;  National, 
Hamilton's  repoit  on,  19;  propo- 
sition to  tax  circulation  on,  51. 

Banks  of  New  York  City  strengthen 
hands  of  Government,  143. 

Banks,  right  to  issue  paper  money 
when  chartered  by  States,  11  ;  to 
circulate  bills  when  chartered  by 
Congress,  11;  bad  condititn  of 
currency  of,  iti  181.5,  31;  great 
increase  iu  number  of,  31  ;  alleged 
favoritism  shown  to,  29;  resump- 
tion of  specie  payments  by,  43  ; 
negotiations  and  agreements  with, 
95  ;  advances  agreed  to  be  made 
by,  ',:6;  National,  bill  for,  120;  of 
deposit  in  1837,  182  ;  forms  of  let- 
ters sent  to,  directing  transfer  of 
deposits,  183 ;  losses  from  failure  to 
pay  specie,  183;  specie  pajments 
suspended  by,  in  1814.  31  ;  in  1837, 
40  ;  in  1857,  70  ;  am.ounts  due  Gov- 
ernment from  insolvent,  43 ;  re- 
sumption of  specie  payments  by,  in 
1837,  43  ;  use  of,  as  depositories  of 
Government  money,  40, 172;  favor- 
ites of  the  administration,  172. 

Bank  circulation,  Benton's  propo- 
sition to  tax,  51 . 

Bank  vs.  Supervisors,  legal-tender 
case,  156. 

Bank  of  Commerce  vs.  New  York 
City,  156. 

Banking  Act,  free,  of  New  York 
State,  43. 

Banking  Act,  National,  120. 

Bates,     Attorney-General,     opinion 


INDEX. 


233 


as  to  constitutionality  of  legal- 
tender  bill,  1:31. 

Bayard,  Thomas  F. ,  Delaware,  re- 
maiks  on  legal-tender  Ijill,  133. 

Ueloher,  Governor,  Massachusetts, 
intrij;ues  of  paper  money  advocates 
against,  4 ;  proclamation  of,  5 ; 
difierences  with  Legislature,  6 ; 
forced  to  retire,  4 ;  subsequently 
Governor  of  New  Jersey,  4  ;  let- 
ter to  Hutchison,  0. 

3ell,  John,  Tennessee,  opposes  bill 
for  postponement  of  I'ourtli  instal- 
ment of  surplus,  1ST. 

Benton,  Thos.  H.,  Missouri,  moves  to 
increase  denominations  of  Treas- 
ury notes,  41  ;  in  favor  of  Treas- 
ury notes,  41  ;  in  favor  of  Treasury 
note  bill  of  1  SoJS,  4.t  ;  proposes  to 
ta.K  bank  circulation,  51 ;  objects 
generally  to  issue  of  Treasury 
notes,  41  :  ''  Thirty  years'  view  " 
upon  Jackson's  course  toward 
Bank  of  United  States,  174;  made 
member  of  committee  to  inquire 
into  Federal  expenditure,  175; 
defends  Jackson's  administration, 
17G  ;  opposes  bill  for  distribution 
of  surplus,  177 ;  his  description 
of  Jackson's  repugnance  to  sign 
bill  for  distribution  of  surplus, 
178  ;  remarks  on  use  of  deposits 
made  by  States,  190. 

Bibb,  Geo.  M. ,  Secretary  of  Treas- 
ury, 53  ;  member  of  committee  to 
inquire  inio  extent  of  Executive 
patronage,  175. 

Bids,  for  Treasury  notes,  76  ;  for 
bonds,  80. 

Bills,  for  Treasury  notes  1813,  15 ; 
arguments  for  and  against,  23 ; 
for  Treasury  notes  1813,  29  ;  for 
Treasury  notes  1837,  41  ;  for  new 
issue  of  Treasury  notes  1838,  43; 
for  Treasury  notes  1840,  4(5  ; 
long  debate  on  bill  of  1840,  4() ; 
loan  introduced  by  Millard  Fill- 
more, 50;  objections  to  Fillmore's 
loan  bill,  .50;  Fillmori's  loan, 
bitter  debate  on,  50  ;  for  issue  and 
reissue  of  Treasury  notes  intro- 
duced 1842,  51 ;  Treasury  notes  of 
1843,  51  ;  Treasury  notes  of  184(i, 
63;  Treasury  notes  of  1847,  04; 
Treasury  notes  of  1857,  70 ; 
National  Bank,  130  ;  legal-tender, 


121  ;  exchequer  of  President  Ty- 
ler, 53  ;  for  loan  and  issue  of 
Treasury  notes,  63  ;  legal  tender 
(.stf  Legal  tenilcrs)  for  rechartcr 
of  Bank  of  United  States,  174  ; 
for  distribution  of  surplus  rev- 
enue, 167.  177  ;  for  postponement 
of  payment  of  fourth  instalment 
of  surplus,  184. 

Bills  of  credit,  in  Federal  Conven- 
tion, 13  ;  authority  of  States  to 
issue,  13 ;  power  of  Congress  to 
emit,  13 ;  discussion  of  right  to 
make  legal  tinder,  14  ;  Hamilton's 
opinion  as  to,  19 ;  revolutionary, 
bore  interest,  44 ;  definition  of,  by 
Chief  Justice  Marshall,  44  ;  argu- 
ment of  committee  of  House  in 
1844  as  to  rignt  to  issue,  54-61. 

Blaine,  James  G.,  Maine,  discusses 
policy  of  legal  tender  issues  in 
"Twenty  Years  m  Congress," 
144-147. 

Blake,  Harrison  G.,  Ohio,  remarks 
on  legal-tender  bill,  125. 

Board  of  Supervisors  of  New  York 
City  claim  greenbacks  are  not 
obligations  of  the  United  States, 
1.56,  157. 

Bollan,  Tl.os. ,  agent  of  Province  of 
Massachusetts  in  England,  7. 

Bonds,  U.  S.,  discount  during  period 
1812-1815,  L9  ;  discount  during 
1860,  1861,  "ja 

Bradley,  Mr.  Justice,  of  Supreme 
Court,  separate  concurring  opin- 
ion in  legal-tender  case,  1 62. 

Brown,  Bedford,  Senator  from 
North  Carolina,  in  favor  of  Treas- 
ury note  bill,  4.5. 

Bubble  Act  enacted  by  Parliament 
in  1720,  7. 

Buchanan,  Jas.,  President,  Treasury 
notes  of  administration  of,  70 ; 
amendment  to  bill  for  postpone- 
ment of  fourth  instalment  of  sur- 
plus, 186. 

Cabinet,  Jackson's,  dissent  from 
his  views,  174  ;  paper  read  to,  174  ; 
changes  in,  17.5. 

Calhoun ,  Jno.  C. ,  of  South  Carolina, 
in  favor  of  Treasury  note  bill  of 
1838,  45 ;  makes  motion  in  Senate 
for  select  committee,  175. 

Cambreling,   Churchill  C,  of  New 


234 


INDEX. 


York,  introduces  Treasury  note 
bill,  4o ;  aigiimeut  of,  in  favor  of 
1)11),  4:;. 

Capital,  of  Confeekrate  States  at 
M.>nt^';oinery,  Ala.,  85 ;  Washing- 
ton, D.  (1,  in  danr;er,  8- J 

Capital  of  depository  banks  in  1S30, 
1><3. 

Cases,  legal-tender.  Bank  vs.  Su- 
pervisors, 157;  Hepburn  vx.  Gris- 
wold,  l.")8;  Parker  r.s.  Davis,  1(3; 
Juilliard  rs.   lUie man,   Ki"). 

Certificates,  tour  per  cent.,  denomi- 
nations of,    117;  convertible  into 
four  per  cent,  bonds,  117;  unneces- 1 
6ary,  117;  eagerness  of  the  people  I 
to  obtain,  117. 

Certificates,  gold,  issued  under  act  1 
of  March  d,  1863,  11.5;  used  for! 
Clearing-house  purposes,  114;  de- 
nominations of,  115 ;  coin  an  I 
bullion  deposited  for,  115;  issued  in 
payment  of  in  erest  on  public  debt, 
115;  terms  of  issue,  115;  amount 
outstanding,  IIG;  of  act  of  July 
12,  1882,  1.55  ;  amount  issued  under 
act  of  July  12,  1882,  15.5. 

Certificates,  legal-tender,  bear  no  in- 
terest, 110;  used  for  Clearing  house 
purposes,  116;  payable  in  U.  S. 
notes  at  place  of  issue,  116;  held 
in  reserve  by  national  banks,  1 16  ; 
amount  reduced  after  resumption 
of  specie  payments,  116  ;  amount 
outstanding,  118. 

Certificates,  loan,  to  be  made  a  legal 
tender,  43. 

Certificates,  silver,  authorized  by  act 
of  February  28,  1878,  1.52  ;  denom- 
inations of,  152;  coin  deposited  for, 
to  remain  in  Treasury,  1.52  ;  to  be 
receivable  for  customs,  taxes,  and 
dues,  152;  may  be  reissued,  152; 
amount  outstanding,  153 ;  act  of 
July  12,  1882,  makes  available  for 
reserve  of  national  banks,  aud  re- 
servable  for  Clearing-house  bal- 
ances, 155  ;  not  a  legaFtender,  155. 
Certificates,  three  per  cent. ,  author- 
ized, 113;  excess  of  bank  reserve 
invested  in,  114 ;  advantage  for 
Clearing-house  purposes,  114; 
amount  of  lirst  issue,  114;  addi- 
tional amount,  114;  to  1  >e  cancell- 
ed, 114  ;  terms  of  redemption,  1 15. 
Chase,  Salmon  P.,  Ohio,  (Secretary 


of  Treasury,  S6 ;  estimates  in  1861, 
86  ;  recommends  loan  of  one  liiiu- 
dicn  nullions  in  Treasury  notes 
bearing  7-,  ',5  per  cent,  interest,  86  ; 
signs  circular  to  receive  demand 
notes  for  .salary,  89  ;  consults  with 
the  banks,  ',)4,  U5  ;  letter  of,  to  the 
Ways  and  Means  Committee,  122  ; 
propo.^es  tvyo  plans  for  strength- 
ening finances,  120;  recoraniend- 
iug  further  issue  of  lcg;d-teiider 
notes,  137;  gives  notice  of  with- 
drawal of  right  to  fund  legal-ten- 
ders into  5-2li"s,  138  ;  Chief-Jus- 
tice, 1 58  ;  delivers  opinion  in  first 
legal-tender  case,  158 ;  dissenting 
opinion  in  second  legal-tender  case, 
164  ;  justifies  legal-tender  policy, 
145  ;  opinion  as  to  power  of  States 
to  create  banks  to  issue  bills,  12. 

Cheves,  Laugdon.  South  Ca:  olina, 
reports  first  bill  for  issue  of 
Treasury  notes,  22. 

Circular,  of  Secretary  Chase  and 
other  officials  agreeing  to  receive 
demand  notes  in  payment  of  sal- 
aries, 89  ;  announcing  redemption 
of  small  notes  in  coin,  93  ;  of  Gen- 
eral Scott  to  army,  89  ;  notifying 
deposit  banks  of  drafts  to  pay  in- 
stalments of  surplus,  182. 

Circulating  medium,  condition  in 
1814,  33  ;  inquiry  as  to,  53  ;  unfit- 
ness of  Treasury  notes  for  use  as, 
39. 

Cities  omitted  from  law  forbidding 
issue  of  fractional  notes. 

Civil  war,  inauguration  of,  83. 

Claims  of  States  for  payment  of 
fourth  instalment,  191. 

Clay,  Henry,  Kentucky,  opposes 
issue  of  Treasury  notes,  42,  45  ; 
attacks  Jackson,  174;  defeated  in 
Presidential  campaign  of  1832, 
174  ;  supports  bill  for  aistribution 
(;f  revenues,  177. 

Clearing-house,  Assistant  Treasurer 
of  U.  S.  at  New  York  member  of, 
141. 

Clifford,  Mr.  Justice,  concurs  with 
Chief  Justice  in  first  legal-temler 
decision,  1.58;  concurs  with  Chief 
Justice  in  dissenting  opinion  in 
second  legal-tender  decision,  164. 

Cobb,  Howell.  Georgia,  Secretary 
of  Treasury,  70  ;  estimates  of,  foi 


INDEX. 


235 


1857,  70;  recommends  Treasury 
notes,  70 ;  proposals  invited  by, 
for  loan,  73 ;  recommends  that 
Government  lands  be  pledged  for 
payment  of  Treasury  notes,  75 ; 
resigns,  75. 
Coin,  gold  and  silver,  only  legal 
tender,  18  ;  subsidiary  silver,  10',) ; 

fold,  Secretary  may  sell  bonds  for, 
or  res  iniption  purposes,  141. 

Coinage  of  silver  dollars,  150  ;  Acts 
regulating,  148,  140. 

Coinage  acts,  of  J7:i;3,  148;  of  1834, 
148;  of  18r)3,  149;  of  1873,  149; 
of  1878,  149. 

Collamer,  Jacob,  Vermont,  moves  to 
strike  out  legal-tender  clause,  135; 
voces  against  legal-tender  bill, 
135. 

Coleman,  John,  advocates  land  bank, 
1 ;  incorporates  a  second  land 
bank,  2  ;  his  scheme  opposed  by 
Governor  Belcher,  3. 

Colonies,  paper  money  in,  1 ;  Par- 
liament forbids  issue  of  paper 
money  by,  3. 

Colonists  embittered  against  Eng- 
land, 3. 

Commissioners  of  Loans  to  coun- 
tersign Treasury  notes,  25. 

Commissioners  of  Sinking  Fund  au- 
thorized to  pay  notes,  26. 

Comndttee  of  Ways  and  Means, 
Mr.  Cheves  chairman  of,  23  ;  Mr. 
Eppes  chairman  of,  3' ;  Mr.  Cam- 
breling  chairman  of,  43  ;  Mr.  Jones 
chairman  of,  46  ;  Millard  Fillmore 
chairman  of,  50  ;  instructed  to  in- 
quire into  issue  of  Treasury  notes, 
53 ;  reports  of,  33,  .54 ;  Gallatin's 
letter  to,  23 ;  Dallas'  report  to, 
31  ;  Spencer's  Istter  to,  53  ;  Di.x:'s 
letter  to,  '77,  89  ;  letter  of  Chase 
to,  133. 

Committee,  Finance,  of  Senate,  letter 
of  Secretary  Chase  to,  137. 

Committee,  select,  to  inquire  into 
extent  of  Executive  patronage, 
175;  report  of,  176. 

Compound  interest  notes  issued  in 
plaje  of  7-3)  notes,  110;  form 
of.  111;  amount  of,  85;  amo  mt 
outstanding,  118;  Secretary  on, 
110;  Acts  to  retire,  113,  114;  were 
legil  tender,  100. 

Condition  of  postal  currency  bad,  104. 


Congress,  power  to  coin  money  10 ; 
authority  to  create  banks,  11; 
to  authorize  bills  of  credit  (see 
Legal  tender)  ;  Acts  of  (see  Acts); 
reduction  of  revenues  by,  in  1845, 
03 ;  extra  session  of  1837,  183 ; 
in  1801,  84 ;  considers  Spencer's 
issue  of  Treasury  notes  an  evasion 
of  law,  54. 

Conkling,  Roscoe,  New  York,  objects 
to  making  U.  S.  notes  a  legal  ten- 
der, 129;  remarks  on  legal-tender 
bill,  1:29. 

Constit'ition,  Federal,  debate  on,  10  ; 
adopted,  19  ;  original  draft  of,  13. 

Constitutional  rig  lit  of  Senate  to 
originate  money  bill,  41. 

Constitutionality  of  issue  of  Treas- 
ury notes  discussed,  in  1813,  2"3  ; 
in  1813,  29;  in  1837,  41  ;  in  1838, 
45  ;  by  Committee  of  Ways  and 
Means,  in  1844,  53;  in  1801  and 
1863,  134-1.36  (also  see  Cases, 
Legal-tender). 

Continental  Congress,  no  legal-ten- 
der i;otes  issued  by,  117;  recom- 
mends Legislatures  of  States  to 
pass  tender  laws,  119  ;  authorized 
issue  of  paper  money,  9 ;  fixed 
total  issue,  9 ;  authorized  a  new 
i.ssue  to  redeem  old,  90. 

Coniinental  money,  first  issue  of, 
9  ;  depreciation  of,  9  ;  required  to 
be  bought  in  for  coin  at  ma;  ket 
value,  9;  new  issue  of,  9;  total 
amount  of,  10 ;  loss  on,  10 ;  an- 
tipathy to,  10 ;  convention  (see 
Federal  Convention). 

Convention,  Federal  (see  Federal 
Convention). 

Cooke.  Jay,  services  in  placing  7-30 
loan,  99. 

Co-operation  of  National  banks  in 
placing  7-30  loan,  93. 

Court,  Supreme,  of  United  States, 
J  56  ;  of  Appeals,  of  fetito  of  Nev/ 
York,  157 ;  of  Errors,  of  Ken- 
tucky, 158  ;  Supreme,  of  Jlassa- 
chusetts,  101. 

Counterfeiting,  penalty  for,  26. 

Crawford,  Wm.  H. ,  Gtorgia,  S^crc- 
tai-y  oc Treasury,  resigns  in  1814, 
31  ;  again  Secretary  in  1816,  16i'  ; 
reports  of,  show  sm'plus,  167  ;  sug- 
gests that  surplus  be  used  in 
internal  improvements,  167. 


23G 


INDEX. 


Credit,  rovolnfcionary  l)ills  of,  horc 
interest,  43  ;  of  notes  receival)le 
for  duties,  good,  UU ;  motion  of 
Mr.  Hull  to  revive,  of  Treasury 
notes,  'V,i. 

Ciisis,  financial,  of  1814,  31  ;  of 
l!s37,  40;  of  1857,  70. 

Crittenden,  John  J.,  Kentucky,  op- 
poses use  of  Treasury  notes  in 
18:^8,  40 ;  opposes  postponement 
of  distribution  of  surplus,  LS!!. 

Cushin<j,  Caleb,  Massachusetts,  ar- 
gument of,  against  Treasury  notes 
in  18J8,  44  ;  opposes  postpcnonient 
of  payment  of  foiu-th  instalment, 
187. 

Dallas,  Alexander  J.,  Secretary  of 
Treasury,  31 ;  succeeds  Crawford 
in  1814,  31 ;  report  to  Committee 
on  Ways  and  Means,  31  ;  recom- 
mends establishment  of  National 
bank,  31 ;  mentions  Treasury 
notes,  32  ;  reports  in  regard  to,  37. 

Danger  of  increasing  Executive 
power,  175. 

Dates  of  maturity  of  Treasury  notes, 
37;  of  first  issues  of  paper  money 
in  Colonies,  1  ;  of  issue  and  re- 
demption of  notes  of  1812,  26. 

Davis,  Mr.  Justice,  dissents  from 
Chief  Justice  in  first  legal-tender 
decision,  1(50. 

Death  of  President  Harrison,  49. 

Debates,  on  striking  out  "emit 
bills,"  14  ;  on  Treasury  notes  in 
1812,  22  ;  on  Treasury  notes,  1813, 
29;  on  Treasury  notes,  1814,  29; 
on  Treasury  notes,  1837,  41;  on 
Treasury  notes,  1838,  43  ;  on 
Treasury  notes,  1840,  40 ;  on  con- 
duct of  Mexican  War,  04 ;  on 
legal-tender  bill,  124-136;  on  de- 
posit of  surplus,  177;  on  post- 
ponement of  fourth  instalment, 
184-187. 

Debt,  national,  highest  amount,  85  ; 
proportion  consisting  of  Treasury 
nott  s,  85  ;  in  1813,  21 ;  in  1840,  50  ; 
extinguished  in  1835,  170. 

Debts  and  dues,  what  notes  receiv- 
able for  (see  Treasury  J^otes  and 
Legal  Tender). 

Decisions,  Bank  ws.  Supervisors,  157; 
Hepburn  vs.  Griswold,  100;  Park- 
er vs.  Davis,  102,  1G3;  Juilliard  z^s. 


Orc^nman,  106,  T.)3;  as  to  claim 
of  N'irginia  for  fourth  instalment 
of  siu'iilus,  192;  Briscoe  r.s.  Bank  of 
Kentucky,  and  other  decisions,  see 
note  page  44. 

Declaration  of  war  with  England, 
22;  with  Mexico,  63;    civil  war,  83. 

Deficiency  in  revenues,  of  Continen- 
tal Congress.  9;  in  1812,  21;  in 
1813,  29  ;  in  1837,  41  ;  from  1837  to 
1841,  49;  in  1840,  C3 ;  during  civil 
war,  84,  85. 

Demand  notes,  limitation  of  amount, 
89  ;  first  issue  of,  89  ;  amount  is- 
sued, 90  ;  difficulty  of  redemption 
in  gold  coin,  90  ;  retirement  of, 
90 ;  action  of  New  York  banks 
in  regard  to,  90;  Secretary's  cir- 
cular as  to,  89 ;  General  Scott's 
circular,  89  ;  refused  by  many,  89  ; 
at  a  premium,  93  ;  denominations 
of,  89. 

Denominations,  of  notes  from  1812  to 
1815,  38 ;  of  notes  of  period  of 
1837,42;  Benton  moves  to  make 
lowest  $100,  41  ;  of  7-30  notes,  89; 
of  demand  notes,  b9 ;  of  frac- 
tional cuiTency,  U  3  ;  of  compound 
interest  notes,  110;  of  5  per  cent. 
Treasury  notes,  1(9;  of  gold  cer- 
tificates 11.5-155;  of  legal-tender 
certificates,  110;  of  4  per  cent, 
certificate.?,  117  ;  of  silver  certifi- 
cates, 152. 

Deposit  Act  (see  Deposit  of  Sui'plus, 
also  page  40)  regarded  as  contract, 
187. 

Deposit  of  public  money  with  State 
banks,  40, 182. 

Depository  banks,  regulation  of,  40  ; 
amounts  due  from,  43  ;  number  of, 
182;  all  but  six  suspend  specie 
pavment,  183 ;  losses  on  account 
of,' 183. 

Deposits  of  surplus  with  States,  pro- 
josition  for,  in  l.'^27,  107;  Pre.'i- 
dent  Jackson's  message  regarding 
constitutionality  of,  168  ;  Jack- 
son's message  of  1830,  170;  change 
of  Jackson's  views  in  183(5,  172  ; 
act  of  June  23,  18:^6,  authoiizi-ig 
178 ;  Secretary  Woodbury  disap- 
proves of,  171  ;  approved  by  Presi- 
dent with  reluctance,  17S;  pro- 
visions of  law  regulating,  179; 
amounts    to    be    deposited,    180; 


INDEX. 


237. 


postponement  of  fourth  instal- 
ment of,  187 ;  Mr.  Buchanan's 
amendment  relative  to,  186  ; 
favorably  re;j;arded  by  opponents 
of  the  administration,  175  ;  propo- 
sitions for.  made  througti  j)ress, 
177;  suggested  by  Secretary  Di.'c 
that  it  be  withdrawn,  189  ;  with- 
drawal dependent  on  future  act  of 
Congress,  1 92  ;  use  of,  by  States, 
190. 

Deposits,  U.  S.  change  from  Bank  of 
the  United  States,  175. 

Depreciation  of  Colonial  paper 
money,  45  ;  of  Continental  paper 
money,  9  ;  loss  from,  10  ;  of  notes 
from  1812-1815,  o95  ;  oO  notes  of 
18o7,  44. 

Description,  of  notes  of  ISI'3,  25  ;  of 
notes  of  1813,30;  of  notes  of  1814, 
30  ;  of  notes  of  1815,  34  ;  of  notes 
of  1837,  42  ;  of  notes  of  1838-1840, 
45,  4(i ;  of  endor.semcnt  on  spurious 
notes,  52;  of  notes  of  1840,  (i4  ;  of 
notes  of  1857-.58,  71,  72 ;  of  7-30 
notes,  87;  of  fractional  currency, 
103  ;  of  compound  interest  notes, 
110;  of  5  per  cent,  notes,  109;  of 
demand  notes,  9L) ;  of:  3  per  cent, 
certihcates,  114;  of  gold  certifi- 
cates, 115,  1.55;  of  legal-tender 
certificates,  116;  of  4  per  cer.t. 
certificates,  tl7;  of  silver  certih- 
cates, 1.52,  155. 

De.^ter,  Samuel,  regarded  the  emis- 
sion of  bil  s  by  banks  chartered  by 
States  as  unconstit  itional,  12. 

Dickerson,  Mahlon,  New  Jersey,  au- 
thor of  bill  to  distribute  surplus, 
introduced  and  discussed  in  1827, 
167. 

Diflerences  betw.^en  coloni.xl  gover- 
nors and  legislatiu'es,  3. 

Difficulties  in  transfjrring  public 
funds,  32 ;  in  paying  fourth  in- 
stalment of  surplus,  185;  in  efFeci- 
ing  loins,  23,  39,  .50,  72,  78. 

Disappearance  of  silver  change,  100. 

Discount  on  U.  S.  loans,  39,  "iS. 

Discussion,  general,  of  the  legal- 
tender  question,  144;  of  the  coin- 
age act  of  1873,  151. 

Dissenting  opinions  of  Justices 
Miller,  Davis,  and  Swayne  in  hrst 
legal-tender  case,  16 ;  of  Chief- 
Justice  Chase,  Nelson,  Field,  and 


Clifford  in  second  legal-tender 
case,  164;  of  Justice  Field  in 
third  legal-tender  case,  106,  210. 

Distribution  of  revenues  from  public 
lands,  175;  of  all  revenues,  175; 
annual,  recommended,  176 ;  op- 
posed by  Benton,  17(; ;  paragraph 
in  Philadelphia  Natioiud  Gazette 
advocathig,  177 ;  bill  for,  intro- 
duced in  Senate,  177 ;  regarded 
as  unconstitutifjnal,  177  ;  changed 
to  a  deposit  with  States,  178. 

Dix,  John  A.,  Secretary  of  the 
Treasury,  76 ;  opens  bids  for 
Treasury  notes,  76 ;  letter  to 
Cliairman  of  Ways  and  Means 
Connnittee,  77  ;  recommends  with- 
drawal of  deposits  made  with 
States,  78,  189;  succeeded  by 
Chase,  80. 

Eagerness  of  people  to  obtain 
postal  currency,  104 ;  to  obtain. 
4  per  cent,  certificates,  117. 

Eft'ect  of  amendment  of  Mr.  Bu- 
chanan's to  postponement  bill, 
186. 

Ellsworth,  Oliver,  against  paper 
money  in  the  Federal  Convention, 
1.5. 

Emissions  of  paper  money,  colonial, 
in  the  colony  of  Massachusetts,  1  ; 
ill  other  colonies,  1 ;  by  means  of 
banks,  2-5 ;  attitude  of  mother 
country  toward,  5 ;  Gov.  Belcher's 
proclamation,  5  ;  Parliament  for- 
bids, 7  ;  It'gal  tender  prohibited,  8  ; 
by  C!ontinental  Congress,  author- 
ized, 9  ;  depreciation  of,  9  ;  amount 
of,  10  ;  loss  to  people  from,  10  ;  ef- 
fect of  on  Federal  Constitution, 
10-12  (see  Trsasury  Notes). 

England,  declaration  of  war  with, 
22  ;  treaty  of  peace  w.th,  34, 

Enterprises,  private  banking,  re- 
stricted by  act  of  Parliament,  7. 

Eppes,  John  W.,  Virginia.,  Chair- 
man of  Committee  of  Ways  and 
Means.  32  ;  report  on  Treasuiy 
notes  in  1814,  32. 

Estimates,  of  amounts  of  Conti- 
nental currency,  10  ;  of  deficiency 
for  year  Ibl.J,  29;  of  balance  in 
Treasury,  1838,  43 ;  of  revenue 
under  tariff  of  1842,  63 ;  of  re- 
ceipts and  expenditures  in  Ibi)'/, 


238 


INDEX. 


70 ;  of  Secretary  Chase  of  require- 
ments for  year  IStil,  ;3,  S(> ;  of 
surplus  revenues,  KJT ;  of  defi- 
ciency in  revenue  for  year  1841, 
4it ;  of  amount  of  public  debt  in 
the  year  1S41 ,  50  ;  of  deficiency  in 
the  year  1840,  6o. 

Evils  of  paper  money  in  colonies, 
4. 

Ewing  Thomas,  Ohio,  appointed 
Secretaiy  of  Treasury  by  Harrison, 
49  ;  report  on  exj)eu(iitures  of  Gov- 
ernment, 4'J  ;  estimates  of  public 
debt,  50 ;    resigns,  50. 

Excess  of  bank  reserve  invested  in 
'6  per  cent,  certificates,  114. 

Expectations  of  States  receiving 
deposits  of  surplus,  187. 

Expedients  to  prevent  depreciation, 
of  colonial  paper  money,  4 ;  of 
Continental  money,  9. 

Expense  of  printing  and  prepar- 
ing Treasury  notes,  how  paid,  26. 

Expiration  of  authority  to  issue 
Tre:isury  notes  in  1S39,  45 ;  in 
1842,  51. 

Extra  session  of  Congress,  in  Sep- 
tember, 1837,  18:j  ;  in  July,  18(Jl, 
84. 

F.vc-SIMILE  of  large  notes  of  1815, 
o5;  of  small  notes  of  1815,  oO  ;  of 
$100  notes  of  1840,  47;  of  note  of 
JIarch  3,  1 843,  end  of  text ;  of 
.$U0  note  of  184G,  65 ;  of  §100  note 
of  1847,  67;  of  $100  note  of  1857, 
73  ;  of  $.50  note  of  March  2,  18G1, 
81  ;  of  demand  note,  91  ;  of  seven- 
thirty  note  of  March  3,  186.5,  lOO ; 
of  fractional  currency,  105-108; 
of  compound  interest  note  of  1864, 
111,  112. 

Faith  of  Government  pledged  for 
payment  of  Treasury  notes,  24. 

Favoritism,  alleged,  shown  to  banks, 
29,  42;  to  deposit  banks,  i:3, 
176. 

Federal  Constitution,  original  draft 
of,  13  ;  deljate  on  clause  relative  to 
emission  of  bills  of  credit,  14-lS ; 
power  to  emit  bills  struck  out,  16; 
States  deprived  of  authority  to 
issue  bills,  13  ;  comments  of  Mr. 
Justice  Strong,  11;  views  of  Daniel 
Webster,  11.18;  power  of  State 
to  create  banks  to  issue  bills  under, 


1 1  ;  opinion  of  Samuel  Dexter,  12 
opinion  of  Secretary  Chase,  12. 

Federal  Convention,  when  held,  13 
debate  in,  on  power  to  emit  bills 
14  ;  motion  of  Gouverneur  Morris 
14;  Mr.  Butler  seconds,  14;  re- 
marks of  iMr.  Madison,  14;  re- 
marks of  Mr.  Gorham,  14  ;  remarks 
of  Messrs.  Miisou,  Mercer,  Ells- . 
worth,  Randolph,  Wilson,  Butler, 
Road,  Langdon,  14-16;  Mr.  Mar- 
tin delegate  to,  16;  report  on  pro- 
ceedings of,  by  Mr.  Martin,  17; 
vote  ot  States,  16 ;  voteof  Virginia, 
16. 

Fessenden,  Wm.  P.,  Maine,  Chair- 
man of  Finance  Committee  of 
Senate,  130  ;  introduces  legal-ten- 
der bill,  130  ;  opens  deliate,  130; 
Secretary  of  the  Treasury,  110; 
authorizes  issue  of  compound  in- 
terest instead  of  seven -thirty 
notes,  110  ;  extract  from  report  of, 
110. 

Field,  Mr.  Justice,  of  Supreme 
Court  of  United  State.s,  concurs 
with  Chief  Justice  in  first  legal- 
tender  decision,  158  ;  concurs  in 
dissenting  opinion  of  Chief  Justice 
in  second  legal-tender  decision, 
164;  dissents  singly  to  the  third 
legal-tender  decision,  166,  210. 

Fillmore,  Millard.  New  York,  Chair- 
man of  Committee  of  Ways  and 
Means,  50  ;  introduces  a  bill  for  a 
loan,  50;  concedes  that  the  loiin 
shall  be  for  short  term,  50 ;  intro- 
duces Treasury  note  bills,  51 ;  op- 
poses postponement  of  fourth 
instalmeut,  187. 

First  issue  of  colonial  paper  money, 
1  ;  of  Continental  paper  money,  9 ., 
of  Treasury  notes,  25. 

First  three  instalments  of  surplus 
money,  payment  of,  40,  181. 

Fiscal  operations  of  Government 
embarrassed  in  1814,  32. 

Five-dollar  demand  notes  iss;ied,  89. 

Five  Treasury  note  acts  of  period 
of  1812,  38. 

Folger,  Charles  J.,  New  York,  Sec- 
retary of  Treasurj',  191 ;  letter  of, 
relative  to  fourth  instalment  of 
snrplus,  lii2;  mandamus  on,  192. 

Form  of  Treasury  notes  (see  Fao- 
simile.) 


INDEX. 


239 


Forms  used  in  making  deposit  with 
Slates,  181  ;  used  in  witlidiawing 
money  from  depository  banks, 
183. 

Fort  Sumter,  attempt  to  relieve,  80  ; 
attack  on  and  surrender  of,  83. 

Forward,  Walter,  Pennsylvania, 
Secretary  of  Treasury,  50 ;  suc- 
ceeds Mr.  Ewing,  50 ;  succeeded 
by  John  C.  Spencer,  53. 

Fourth  instalment  of  surplus,  dif- 
ficulty in  paying,  183  ;  bill  to  post- 
pone payment  of,  184  ;  debate  on 
postponement  of,  187,  188  ;  post- 
ponement of,  188 ;  demand  for, 
made  by  Virginia  and  Arkansas, 
193. 

Fractional  currency,  necessity  for, 
100;  Act  of  July  17,  1803,  author- 
izing postal,  100 ;  denominations 
of,  103;  receivable  in  sums  of  $5 
for  dues,  etc. ,  103  ;  fac-similes  of, 
10.5-108;  issue  of,  by  privats  per- 
sons, corporations,  etc., prohibited, 
103  ;  amount  of  limited,  103  ;  ex- 
changeable for  United  States  notes 
in  suras  not  less  than  three  dollars, 
104 ;  people  anxious  to  obtain, 
104;  paid  in  sheets  to  army,  104; 
total  amount  issued,  101;  wore 
out  rapidly,  104  ;  replaced  by  sub- 
sidiary silver  coin,  105. 

Funding,  of  legaV-teader  notes  pro- 
vided for,  137,  136  ;  of  legal-tender 
notes  to  cease  after  certain  date, 
138;  of  seven-thirty  note.>,  98;  of 
one-  and  tAO-year  notes  into  com- 
pound interest  notes,  110,  115;  of 
compound  interest  notes  into  three 
par  cent,  certificates,  113,  115;  of 
Treasury  notes  of  1813-1815,  38. 

Funds,  public,  difficulty  in  transfer- 
ring, 33  ;  kept  with  banks,  2t),  40, 
183  ;  kept  with  Bank  of  United 
States,  40;  changed  to  State  banks, 
175  ;  unavailable,  43,  78,  183;  losses 
of,  through  banks,  43, 183. 

Gallatin,  Albert,  Secretary  of 
the  Treasury,  31 ;  first  suggests 
issue  of  Treasury  notes,  3~i ;  his 
plan  for  Treasury  notes,  33  ;  letter 
of,  to  Ciiairman  of  VVay.s  and 
Means  Co.mmittee,  23. 

General  Scott,  his  circular  to  the 
army  as  to  demand  notes,  89. 


General  sentiment  in  favor  of  Treas- 
ury notes  in  1847,  04. 

Gold  and  silver  coin  only  can  bo 
made  a  legal  tender  by  States,  13  ; 
only  legal  tender  until  passage  of 
legal-tender  act  in  1803,  19. 

Gold  coin,  demand  notes  payable  in, 
90,  91 ;  seven-thirty  notes  payable 
in,  93 ;  the  standard  after  1873, 
150;  over-valued  by  Act  of  1834 
and  took  place  of  silver,  148. 

Gorham,  Nathaniel,  Massachusetts, 
remarks  in  Federal  Co7ivention,  14. 

Gouverneur  Morris,  remarks  in  Fed- 
eral Convention,  14. 

Government,  Federal,  operations  of, 
in  1814,  31  ;  deprived  of  use  of 
specie,  14,  33 ;  Treasury  notes 
based  on  faith  of,  24 ;  Treasury 
notes  1813-1815  receivable  for 
dues  to,  24,  29,  39  ;  Treasury  notes 
1837  receivable  for  dues  to,  43,  05; 
Treasury  notes  of  1857  receivable 
for  dues  to,  73  ;  Treasury  notes  of 
1801  receivable  for  dues  to,  81 ; 
loan  certificates  to  be  receivable 
for  dues  to,  43  ;  credit  of,  affected 
by  political  complications,  73. 

Government  of  Confederate  States, 
organization  of,  83. 

Governor  Belcher,  Massachusetts,  in- 
trigues of  paper  money  advocates 
against,  4 ;  differences  with  Legis- 
lature, 6 ;  forced  to  retire,  4 ; 
Governor  of  New  Jersey,  4 ;  letter 
to  Hutchison,  6. 

Governors  of  Massachusetts,  opposi- 
tion to  paper  money,  3. 

Gray,  Mr.  Justice,  delivers  opinion 
of  court  in  third  legal  tender  de- 
cision, 193. 

Halsted,  William,  New  Jersey, 
claims  that  deposit  act  was  not  a 
contract,  187. 

Hamilton,  Alexander,  report  on  Na- 
tional Bank,  19 ;  opinion  as  to 
emission  of  bills  of  credit  by  Gov- 
ernment, 19;  never  suggested 
Treasury  notes,  23. 

Harrison,  William  H.,  elected  Presi- 
dent by  Whig  party,  49  ;  appoints 
Ewing  Secretary  of  Treasury,  49 ; 
death  of,  49  ;  policy  of  administra- 
tion changed  by  death  of, 

Hickman,  John,  Peuns-  Ivania,  votes 


240 


INDEX. 


for  legal-tender  bill  as  a  necessity, 
1  •-'»•). 

Hooper,  Rajinuel,  Massachusetts,  pre- 
pares National  liank  bill,  l.'2() ;  re- 
marks on  legal -tender  l)ill,  131. 

HoTise  of  Representatives,  refuses 
to  consider  resolutions  to  make 
Treasury  notes  a  legal  tender.  ;>> ; 
does  not  di.scuss  piopcsition  to 
make  loan  certificates  a  legal  ten- 
der, 4o ;  long  session  of,  ni  181i>, 
41) ;  objects  to  S  nate  introduciug 
money  bill,  41 ;  act;oa  of  (see  Bills 
and  Acts). 

Howell  Cobb,  Georgia,  Secretary  of 
Treasury,  70  ;  estimates  for  year 
1857,  70  ;  recomiMcnds  Treasury 
notes,  70 ;  invites  proposals  for 
loan,  7^  ;  recommen(is  that  public 
lands  be  pledged  for  payment  of 
Treasury  notes,  75. 

Hutchison,  Edward,  Massachusetts, 
forms  specie  bank,  3. 

Hutchison,  Thomas,  JIassachusetts, 
letter  to,  from  Governor  Belcher,  0. 

Increase  of  public  debt,  from  1837 
to  1841,  .'".U  ;  from  1841  to  1844,  Go  ; 
from  1844  to  18(31,  73;  to  August 
31,  1805,  85. 

Independent  Treasury  Act,  repeal 
of,  50. 

Ingham,  Samuel  D.,  Secretary  of 
Treasury,  168  ;  estimates  for  year 
1829,  1(58 ;  reports  amount  applica- 
ble to  payment  of  debt,  108  ;  re- 
ports probable!  surplus,  108. 

Interest,  paper  money  issued  by 
States  durini;  Revolution  bore,  44; 
on  Continental  money,  9 ;  on  Treas- 
ury notes  of  1812.  25;  on  notes 
of  1813,  1814,  and  1815,  39;  small 
notes  of  1815  bore  no,  34;  on  notes 
of  1837,  42 ;  on  notes  of  1838,  45 ; 
nominal,  of  one  mill  per  cent.,  40 ; 
on  notes  issued  by  Secretary  Spen  ■ 
cer,  52 ;  report  on,  by  Committee 
of  Ways  and  Means,  5() ;  on  notes 
of  1846,  64  ;  on  notes  of  1847,  69  ; 
on  notes  of  1857,  71  ;  bids  on  notes 
of  1800,  7t; ;  on  notes  of  1801,  8  > ; 
on  notes  of  the  civil  war,  88,  1(.0, 
110;   on  certificates,  114,  116,  117. 

Introduction  of  bills  (see  Bills). 

Issues,  paper  money,  in  Colonies, 
object   of,   1  ;    by   means   of   loan 


banks,  2  ;  by  merchants  of  Boston, 
2;  by  Hutciiison's  specie  bank,  3; 
opposition  to,  by  Parliament,  3 ; 
Acts  of  Parliament  prohiljiting,  3, 
7  ;  depreciation  of,  5 ;  loss,  and 
money  inflated  bj'.  4. 

Issues  of  paper  money  by  Conti- 
nental Congress,  first  issue  of,  9  ; 
depreciation  of,  9  ;  bought  in  at 
market  value  for  coin,  9  ;  new  in 
place  of  old,  9  ;  total  amount  of, 
10;  loss  on,  10;  antipathy  to,  10. 

Issues  of  paper  money  from  1  il2  to 
1815  (see  Notes,  Treasurj',  fiom 
1812  to  1815). 

Issues  of  paper  money  of  period  of 
1837  (see  Notes,  Treasury,  of  pe- 
riod of  183T). 

Issues  of  paper  monej'  of  Mexican 
War  (see  Notes,  Treasury,  of  Mex 
ican  War). 

Issues  of  })aper  money  of  Buchan- 
an's Administration  (see  Notes, 
Treasury,  of  Buchanan's  Adminis- 
tration). 

Issues  of  paper  money  o*  Civil  War 
(see Notes,  Tieasury,of  Civil  War). 

Jackson,  Andrew.  President  of 
United  States,  1(;8 ;  message  to 
Cong:  ess  of  1829,  16S  ;  thinks  u.=e 
of  surplus  for  internal  improve- 
ments unconstitutional,  169;  ad- 
vises apportionment  of  surplus 
among  States,  169;  message  of 
183(),  170;  views  as  to  surplus, 
change  in  1830,  171  ;  causes  of 
change  in  his  views,  172;  message 
of  1836,  173  ;  attack  on  Bank  of 
the  United  States,  174  ;  declares 
in  18'.9  against  rechaiter  of  bank, 
174 ;  determines  to  receive  public 
deposits  from  bank,  174 ;  disa- 
grees with  his  Cabmet,  174;  reads 
paper  to  Cabinet.  1 74 ;  makes 
Taney  Secretary  of  Treasury,  175  ; 
orders  removal  of  deposits,  175; 
pioposes  method  of  distribution  of 
surplus,  1 79. 

Jay  Cooke,  services  of,  in  placing 
seven -thirty  loan,  99. 

Justice  Story,  comments  on  consti- 
tutionality of  issue  of  notes  by 
bank  chartered  by  State,  11. 

Justices  of  Supreme  Court,  in  1809, 
158;  in  1871,  162. 


INDEX. 


241 


KELi,oon,  Stkpiien  W.,  Massachu- 
setts, remaiks  of,  oa  legal-tender 
bill,  125. 

Kiiif,'  oE  England,  issue  of  paper 
mo-.iey  in  Colonies  to  be  under 
control  of,  7. 

Land  Bank,  proposed  by  John  Cole- 
man in  1715,  1  ;  sec(jnd,  proposed 
in  173'.l,  3  ;  plan  of,  2 ;  opposed  by 
Governor  Belcher,  3. 

Lingdon,  John,  New  Hampshire, 
remarks  in  Federal  Convention, 
16. 

Laws  (see  Acts  and  BillsV 

Legil  tender,  paper  money  prohib- 
ited in  Colonies,  IS  ;  gold  and  silver 
coin,  only,  a,  under  Constitution 
prior  to  18)3,  It);  proposition  to 
make  Treisary  notes  a,  rejected, 
33  ;  proposition  t  >  make  loan  cer- 
titicates  a,  rejectsd,  43 ;  (!!onti- 
nsntal  Congress  had  no  power  to 
make  paper,  117  ;  States  pass  ten- 
der laws.  111);  discussed  in  Fed- 
eral Convention,  14. 

Legal-tender  Act,  bill  introduced  in 
Committee  by  Mr.  Spaulding,  130  ; 
letter  of  Attorney-General  Bates 
in  regard  to,  131  ;  reported  to 
House,  131  ;  hostility  of  the  press, 
131  ;  hostility  of  tlie  banks,  131  ; 
bill  submitted  to  the  Secrstary, 
131  ;  again  reported  to  House  with 
the  Secretary's  amendments,  131  ; 
passed  the  House,  131 ;  vote  on 
bill  in  House,  131 ;  amendments  in 
Senate,  13*;  charactjr  of  debate, 
13i;  Secretary  Chase's  letter  to 
Committee  of  Ways  and  Means, 
133  ;  bill  thoroughly  discussed 
throughout  the  country,  134 ;  a 
meisure  of  necessity,  131 ;  ex- 
tracts from  debate  in  Senate,  130- 
13.T  ;  Conference  Committee,  13  ; 
approved  by  President  February 
25,  1863,  13();  of  1863,  authorized 
issue  of  150  millions  dollars  in 
note.s,  136;  of  June  11,  1862,  138; 
of  March  3,  1863,  138;  policy  of, 
discussed  by  Mr.  Blaine,  140-147 ; 
Secretary  McCulloch's  opinion  of, 
139. 

Legal-tender  decisions.  Bank  v.  Su- 
pervisors, 156-157;  Hepburn  v. 
Griswold,  157-161  ;  Parker  v.  Da- 

11 


vis,  161-165;  JuHliard  v.  Green- 
man,  165,  193;  dissenting  opinions, 
100.  164,  166,  310. 

Legal-tender  notes,  authorized  by 
act  of  February  35,  18r.3,  136; 
bore  no  interest,  136  ;  payable  to 
bearer  at  Treasury.  136;  denomina- 
tions not  less  than  f  5, 136  ;  difl'ereil 
from  demand  notes,  fundable  into 
bonds,  136 ;  receivable  for  all 
debts,  public  and  private,  except 
duties  on  imports,  137 ;  descrip- 
tion of,  137  ;  act  of  June  11,  1862, 
authorizes  under  $5,  138 ;  whole 
amount  authorized,  138;  restric- 
tion on  funding,  138  ;  effect  of  re- 
striction, 138  ;  highest  amount 
outstanding.  139;  retirement  of 
under  Secretary  McCulloch,  140; 
increase  under  Secretaries  Bout- 
well  and  Richardson,  140;  restric- 
tion of  amount  in  1874,  140  ;  re- 
tirement after  1875,  140;  amount 
outstanding  fixed  in  1878,  141  ; 
amounts  at  various  dates,  1 43 ; 
payment  on  presentation  in  coin, 
143 ;  certificates  of  deposit  for 
(see  Certificates,  Legal -tender). 

Legal  reserve  of  national  banks, 
gold  certificates  held  as,  155  ;  sil- 
ver certificates  held  as,  155;  cer- 
tificates for  legal-tender  notes  hold 
as,  116;  three  per  cent,  certificates 
held  as,  114. 

Legislature  of  New  York,  action 
remitting  taxes  on  U.  S.  securi- 
ties, 156. 

Legislatures  of  States  accept  depos- 
its of  surplus  money,  181. 

Letter,  of  Governor  Belcher  to 
Thomas  Hutchison,  6  ;  of  Mr.  Bol- 
lan,  agent,  7;  of  Seeretary  GjUa- 
tin  to  Committee  of  Ways  and 
Means,  33 ;  of  Secretary  Chase  to 
Committee  of  Ways  and  Means, 
133;  of  Secretary "  Chase  to  Mr. 
Spaulding,  134  ;  of  Secretary  Spen- 
cer to  Committee  of  Ways  and 
Means,  53. 

Lincoln,  Abraham,  President  of  the 
United  States,  117 ;  signs  legal- 
tender  act,  117. 

Loans,  temporary,  of  1810,  22;  of 
1813,  29  ;  policy  of  Congress  as  to, 
in  1812-15,  33 ;  authorized  in  1815to 
fund  Treasury  notes,  34 ;  discount 


242 


INDEX. 


on,  from  ISl?-!?;,  30;  bill  for,  in- 
troduced by  MiUard  Fillmore,  50  ; 
object  defeated,  5't ;  Treasury  tiotcs 
a  form  of,  59  ;  Treasury  notes  of 
Mexican  War  fundable  into,  (iU ;  of 
IS'.UI,  70;  of  18(il,  7'.);  on  August 
'6\ ,  18(>5,  iS5  ;  tjmporary,  85  ;  by  the 
New  York  banks,  '.)5  ;  seven-thirty 
notes  a  popular,  '.Kt ;  for  funding 
legal-tender  notes,  117;  obtained 
on  security  of  Treasury  notes,  35  ; 
to  aid  in  resumption  of  specie  pay- 
ments, 141. 

Loan  banks,  bills  issued  by,  S. 

liOsses  on  colonial  paper  money,  4  ; 
on  Continental  paper  money,  10; 
on  fractional  currency,  104. 

jVIauison,  James,  remarks  on  Fed- 
eral Convention,  14 ;  note  on  vote 
of  Virginia,  16. 

Mandamus  on  Secretary  of  Treasury 
by  ytate  of  Virginia,  192. 

Marshall,  Chief  Justice,  definition 
of  bills  of  credit,  44. 

Martin,  Luther,  Maryland,  delegate 
to  Federal  Convention,  lii;  address 
to  Maryland  Legislature,  17  (also 
see  note  on  page  10). 

Mason,  George,  Virginia,  remarks  on 
Federal  Convention,  14. 

Massachusetts,  paper  money  issues 
in,  I;  loan  banks,  «;  specie  banks, 
2,  3  ;  governors  of,  oppose  paper 
money,  3  ;  makes  Continental 
money  a  legal  tender,  110. 

Maximum  of  public  debt,  85 ;  of  le- 
gal-tender notes,  1:^8  ;  of  Treasury 
notes  prior  to  civil  war,  52,  G9,  70  ; 
of  fractional  currency,  104. 

McCulloch,  Hugh,  Sacretary  of  the 
Treasury,  b^9  ;  opinion  of  Legal- 
tender  Act,  139  ;  retires  legal-ten- 
der notes,  140. 

Measures  (see  Bills  and  Acts). 

Mercer,  John  F. ,  Maryland,  friendly 
to  paper  money  in  Federal  Con- 
vei!tion,  15  ;  remarks  of,  15 

Mexico,  declarat'on  of  war  with,  68. 

Miller,  Mr.  Justice,  dissents  to  first 
legal-tender  decision,  160. 

Money,  power  of  Congress  to  bor- 
row. 59,  159;  borrowed  on  security 
of  Treasury  notes,  25 ;  specie,  stock 
diminished,  81 ;  Continental,  made 
legal  tender  by  States,  119;  colonial 


paper,  2;  surplus  of  United  Rtatea 
(see  1  )eposit  of  Snrj)lus);  legal-ten- 
der (see  Legal-tender);  power  of 
Congress  to  coin,  11. 

Morrill,  JustinS. ,  Vermont,  remarks 
on  Legal-ttnder  Act,  1^9. 

Morris,  Gouverneur,  moves  to  strike 
out  '"emit  bdls"  from  draft  of 
Constitution,  14. 


National  bank,  Secretary  Dallas 
I'ecommends  establishment  of,  31 ; 
bill  for,  referred  to  committee,  12; 
bill  for,  vetoed  by  President  Tyler, 
53. 

National  banks,  bill  for,  prepared, 
120 ;  co-operation  of,  in  placing 
seven-thirtv  loan,  90. 

National  debt  in  1812.  21  ;  extin- 
guished in  18;j5,  170;  anrount  of, 
in*  1841,  50;  amount  of,  in  1860, 
72  ;  maximum  of,  in  1S65,  85  ; 
form  of,  in  1 865,  85. 

Newcomb,  Prof.  Simon,  criticism 
npon  Silver  Commission,  151  (see 
also  nore  at  foot  of  page  151). 

New  York  C.ty  banks,  action  of,  as 
to  demand  notes,  90  ;  first  seven- 
thirty  loan  negotiated  by,  93 ; 
total  amount  of  seven-thirty  notes 
taken  by,  9o  ;  arrangements  of,  for 
placing  .seven-thirty  loans,  93  ;  re- 
port of  Loan  Committee  of,  94  ; 
Secretary  Chase's  report  in  regard 
to  action  of,  93 ;  loans  made  by, 
in  1861.  16. 

Niles,  John  M.,  Connecticut,  op- 
poses Mr.  Buchanan's  amendmei.t 
to   postponement  bill,  186. 

Niles'  Register, extract  from,  relative 
to  Treasury  notes  of  1812,  26; 
notice  of  distiibution  of  surplus 
sent  to  banks,  131. 

Note  of  Madison  on  vote  of  Virginia 
in  the  Federal  Convention,  1(5. 

Notes,  compound  interest  (see  Com- 
pound interest  notes). 

Notes,  Exchequer,  recommended  by 
President  Tyler,  53. 

Notes,  fractional  (see  Fractional 
currency). 

Notes,  legal-tender  (see  Legal-ten- 
der notes). 

Notes,  one-  and  two-year  (see  Ona- 
and  two-year  notes) . 


INDEX. 


243 


Notes,  Beven-thirty  (see  seven- 
thirty  notes). 

Notes,  Tieasiuy  (see  Treasury 
notes). 

Objections  to  issue  of  Treasury 
notes  1812-1815,  22,  29, 32  ;  to  issue 
of  Treasury  notes  in  1837,  41,  44, 
4(i,  53  ;  of  Committee  on  Ways  and 
Means  to  spurious  notes,  5:! ;  to 
legal-tender  bill,  128  ;  Woodbury's  j 
to  distribution  of  surplus,  ]?1  ;  to 
postponement  of  fourtli  instal- 
ment, 180;  to  loan  bill  of  1841,  50. 

Obligations  of  the  United  States, 
legal-tender  notes  held  not  to  be, 
156  ;  legal-tender  notes  held  to  be, 
157. 

One  and  two  year  notes  of  1863, 1C9  ; 
bore  interest  at  live  per  cent.,  110  ; 
redeemed  in  compound  interest 
notes,  110. 

Opinion  of  Hamilton  on  authority  of 
Government  to  emit  paper  money, 
ly  ;  of  Samuel  Dexter  as  to  right 
of  States  to  charter  banks  to  issue 
notes,  12  ;  of  Clii'-f  Justice  Chase, 
13  ;  of  Secretary  McCulloch,  as  to 
Legal-Tender  Act,  139;  of  At- 
torney-General Bates  as  to  legal- 
tender  bill,  121. 

Opinions  of  courts.    (See  Decisions.) 

Opposition  of  Presiilent  Jackson  to 
distribution  of  surplus,  171  ;  to 
bill  postponing  payment  of  fourth 
instalment,  186;  of  newspapers 
and  banks  to  legal-tender  bill,  121. 

Outstanding  Treasury  notes,  71,  118. 

Paper  read  by  President  Jackson 
to  his  cabinet,  174. 

Paper  money  of  the  colonies,  first 
issued  in  Massachusetts,  1  ;  issued 
in  other  colonies,  1  ;  dates  of  first 
issues,  1  ;  issued  by  loan  banks, 
2  ;  rate  of  interest  on,  2  ;  payable 
in  silver  issued  by  merchants  in 
Boston,  3 ;  prohiVjited  by  Parlia- 
ment, 37  ;  opposition  of  governors 
to,  3 ;  intrigues  of  advocates  of, 
4 ;  depreciation  of,  4  ;  terms  ap- 
plied to,  4  ;  loss  and  misery  in- 
flicted by,  4  ;  value  in  coin  in  dif- 
ferent States,  5  ;  disputes  about, 
7 ;  attitude  of  mother  country,  7. 

Paper    money  of  Revolution  emit- 


ted by  Continental  Congress,  9 ; 
first  issue  of,  9 ;  depreciation  of, 
9,  10;  naw  issue  bearing  interest 
payable  in  coin,  9  ;  amount  lim- 
ited, 1 0  ;  redeemable  in  coin  at 
market  value,  9 ;  ceases  to  circu- 
late, 10  ;  loss  through,  10  ;  made  a 
legal-tender  in  certain  States,  119  ; 
issued  by  States,  10. 

Paper  money  under  constitution, 
power  of  States  to  emit,  taken 
away,  10,  13;  power  of  States  to 
charter  banks  to  issue,  doubted,  11, 
12  ;  discussion  on,  in  Federal  con- 
ventions (see  also  Notes). 

Paris,  Silver  Commission  meets  at, 
151. 

Parker  v.  Davis,  legal-tender  case, 
161. 

Parliament,  acts  of,  in  reference  to 
paper  money.  7. 

Pay  of  signers  of  Treasury  notes,  25. 

Payment  of  fourth  instalment  of  sur- 
plus postponed,  188. 

Payment,  specie,  suspended  in  1814, 
31;  suspended  in  1837,  40;  re- 
sumption of,  in  1838,  43  ;  suspen- 
sion of,  in  1857,  70  ;  suspension  of, 
in  1861,  84;  resumption  of,  on 
January  1,  1879,  141. 

Peace,  treaty  of,  with  England,  34. 

Pelatiah  Webster  recites  evils  of 
Colonial  paper  money,  4. 

Pendleton,  George  H.,  Ohio,  remarks 
of,  on  legal-tender  bill,  128. 

People,  seven-thirty  loans  taken  by 
the,  98  ;  anxiety  of,  to  obtain  frac- 
tional currencj',  104  ;  ansi;ty  of,  to 
obtain  four  per  cent,  certificates, 
117. 

Pickens,  Francis  W.,  South  Carolina, 
on  postponement  of  fourth  insta?.- 
inent  of  surplus,  138. 

Plan  for  Treasury  notes,  Secretary 
Gallatin's,  21 ;  Secretary   Dallas', 

Plans  of  States  to  use  surplus  depos- 
ited, 190. 

Postage  stamps  used  for  change.  100. 

Postal  currency  (see  fractional  cur- 
rency). 

Postmaster-General's  report  on  use 
of  postage  stamps  for  change,  100. 

Postponement  of  fourth  instalment, 
rendered  necessary  by  financial 
pressure,    182 ;    extra    session    of 


244 


INDEX. 


Coiipvoss  pallod  to  considpr,  18" ; 
lVe.-i(l(,'iifc  Van  I?iiicn  on,  \'6'\\  bill 
for,  introduced  liy  Siias  Wiight, 
l>i4  ;  long  debate  on.  in  House  and 
Senate,  184,  187  ;  bill  for,  amended, 
187  ;  bill  for,  passed,  188. 

Power  of  Executive,  select  commit- 
tee to  inquire  into,  1 75. 

Prejudices  against  Treasury  notes, 

Premium,  on  .small  Trea.'ury  notes 
of  181.5,  37;  on  Treasury  iiotcs  of 
18^7,  45  ;  on  5  per  cent.  U.  S. 
stock,  72  ;  on  demand  notes,  9o  ;  ; 
on  gold,  97,  100;  on  four  per 
cent,  bonds,  117. 

Preparation.s  of  Secretary  Woodbury 
for  distribution  of  surplus  money, 
ISl,  mi. 

Presidents,  Jackson,    168,170,  172; 
Harrison.    49 ;     Tyler,    .^3 ;    Van 
Buren,  183  ;  Lincoln,  117  ;  Hayes,  | 
150. 

Preston.   William   C,    South  Caro-  \ 
lina,  opposed  to  Treasury  note  bill 
of    1 838,    45 ;    opposes    postpone- 
ment of  fourth  amendment,  18(J. 

Proclamation  of  Governor  Belcher, 
5. 

Pro\incial  Governors,  trouble  with 
their  Legislatures,  3. 

Public  advertisement  for  bids  for 
Treasury  notes,  71,  70  ;  for  loans, 
80. 

Public  debt  (see  National  debt). 

Public  lands,  distribution  of  revenue 
from,  175  ;  distribution  of,  175. 

QtOTATiONS  of  coin  value  of  Colonial 
paper  money,  5  ;  of  bids  for  Treas- 
ury notes  in  1861,  76;  of  bonds, 
notes  and  gold  for  1863,  1863,  1864, 
97. 

Quotations  from  Governor  Belcher's 
proclamation,  5  ;  from  Chief  Jus- 
tice Story,  1 1 ;  from  Secretary 
Chase,  reports  and  letters,  12,  80, 
95,  1:2,  124;  from  Daniel  Webster, 
18  ;  from  debate  in  Federal  Con- 
vention, 14;  from  Luther  Martin, 
16;  from  Niles'  Register,  20; 
from  Secretary  Dallas,  31  ;  from 
report  of  Committee  on  Ways  and 
Means,  in  Spencer's  notes,  5,  3 ; 
from  Secretary  Dix,  77,  1 89  ;  from 
General  Scott's  circular,  91  ;  from 


report  of  associated  banks,  04 ; 
from  Secretary  iMcCiilloch,  9^, 
139;  from  Postmaster-dlencral's 
report,  100;  from  dtbate  on  Kgal- 
tendcr  bill,  124-135;  from  James 
G.  Blaine,  144-147;  from  Prof cssor 
Ncwcomb,  151  ;  from  legal-tender 
decisions,  157,  11)2  ;  from  Presi- 
dent Jackson,  168,  170,  174;  from 
Secretary  Woodbury,  171  ;  from 
Thomas  H.  Benton,  190. 

Randolph,  Edmund,  Virg  nia,  re- 
marks in  Federal  Convention,  15. 

Rates  of  interest  (see  Interest). 

Read,  remarks  in  Federal  Conven- 
tion, K". 

Reasons  for  failure  of  loan  bill  of 
1841.  50. 

Rebellion,  war  of,  inaugurated,  83. 

Rebellious  demonstrations  among 
colonists,  6.  ' 

Receipts,  from  sale  of  public  lands, 
171  ;  from  loans,  1812-1815,  39. 

Re-charter  of  Bank  of  U.  S.  op- 
posed by  President  Jackson,  174; 
bill  for,  passes  both  Houses,  174; 
bill  for,  vetoed,  174 ;  made  an 
issue  in  campaign  of  1832,  174. 

Refusal  of  Wnigs  to  vote  on 
Treasury  note  bill  in  1840,  96. 

Register  of  Treasury,  notes  first 
signed  by,  42. 

Reissues  of  Treasury  notes  (see 
Treasury  notes). 

Removal  of  deposits  from  Bank  of 
U.  S.,  175. 

Report  of  Hamilton  on  a  National 
bank,  19 ;  of  Secretary  Dallas  in 
1814,  32;  of  Mr.  Eppes,  32 ;  of 
Secretary  Dallas  in  181.5,  37;  of 
Secretary  Woodbury  in  1839,  45  ;  of 
Secretary  Woodbury  in  1840,  49 ; 
of  Secretary  Ewing  in  1841,  49;  of 
Committee  of  Ways  and  Means  on 
Spencer's  notes,  54 ;  of  Secretary 
Cobb  in  1857,  70 ;  of  Secretary 
Cobb  in  1860,  73;  of  Secretary 
Chase,  for  year  1861,  86,  9.5;  of 
loan  committee  of  associated 
banks  of  New  York  City,  94  ;  of 
Secretary  McCiilloch  for  1865,  98  ; 
of  Postmaster-General  in  1862, 
100  ;  of  Deputv  Comptroller  of 
Currency  in  1870,  100;  of  Paris 
silver  commission,  151 ;  of  Secre' 


INDEX. 


245 


taries  Crawford,  Rush,  and  suc- 
cessors, 167  ;  of  Secretary  Ingham 
in  1829,  168. 

Reserve,  National  Bank  (see  Na- 
tional Bank  Reserve). 

Resohition  of  Continental  Con- 
gress recommending  that  States 
make  paper  issues  legal  tender, 
117;  of  associated  banks  in  New 
York  City,  90 ;  making  Treasury 
notes  a  legal  tender,  33. 

Resumption  of  specie,  payments, 
in  1838,  43;  on  January  1,  1879, 
141 ;  act  of  1875  requiring,  141. 

Revenues  from  public  land.s,  distri- 
bution of,  17.5  ;  surplus  (see  Sur- 
plus Revenues)  ;  deposited  with 
State  banks,  40,  182. 

Revenues  for  1837,  41 ;  expenditures 
exceed,  from  1837  to  1841,  49. 

Richardson,  Secretary,  increase  of 
legal-tender  notes  under  adminis- 
tration of,  140. 

Rush,  Richard,  Secretary  of  Treas- 
ury, 167. 

Scott,  General,  issues  circular 
about  demand  notes  to  army.  89. 

Secession  of  Southern  States,  83. 

Secretaries  of  the  Treasury,  Hamil- 
ton, 19  ;  Gallatin,  22  ;  Dallas,  31  ; 
Crawford,  31,  167  ;  Rush,  167  ; 
Ingham,  168;  Duane,  175;  Taney, 
175  ;  Woodbury,  41,  42,  45,  49, 
171,  180;  Spencer,  52;  Ewing, 
49 ;  Forward,  52  ;  Bibb,  53 ;  Cobb, 
70,  75  ;  Dix,  76,  77 ;  Chase,  80,  95, 
122;  Fessenden,  110;  Walker,  63; 
McCulloch,  98,  139 ;  Richard- 
son, 140 ;  Sherman,  141  ;  Folger, 
192. 

Secretary  of  the  Treasury  author- 
ized to  borrow  money  on  security 
of  Treasury  notes,  25. 

Series  of  fractional  currency,  103, 
104  ;  of  seven-thirty  notes,  93,  97  ; 
of  colonial  currency,  4 ;  of  Conti- 
nental currency,  9. 

Seven-thirty  notes,  first  issue  au- 
thorized by  acts  of  July  17,  and 
August  5,  1861,  89  ;  suggested  by 
Gallatin,  88 ;  interest  on  first  is- 
sue paid  in  gold,  93 ;  fundable 
into  bonds,  93 ;  negotiation  of 
first  loan  on,  with  New  York 
banks,    93,   96 ;    act  of    June  30, 


1864,  authorizing  second  issue,  97  ; 
act  of  March  3,  186.5,  authorizing 
third  issue,  97  ;  denominatioua 
of,  98  ;  last  two  issues  fundable 
into  bonds,  98 ;  a  popular  loan, 
98  ;  services  by  Jay  Cooke  in 
negotiating,  99 ;  co-operation  of 
national  banks,  99  ;  form  of,  100  ; 
reverse  described,  99. 

Sherman,  John,  Secretary  of  Treas- 
ury, favors  legal  tender  clause,  132 ; 
votes  in  favor,  135 ;  member  of 
Conference  Com.,  136;  sells  bonds 
to  prepare  for  resumption,  141 ; 
confidence  of  note  holders  in,  1^3. 

Signers  of  Treasury  notes,  pay  of,  25. 

Silver  certificates  authorized,  152 ; 
denomitations  of,  1.52;  coin  depos- 
ited for,  to  be  returned  in  Treasury, 
152  ;  amount  outstanding,  153  ; 
not  a  legal-tender,  155 ;  count  as 
reserve  of  national  banks,  155 ; 
receivable  for  Clearing-house  bal- 
ances, 1.55 ,  receivable  lor  customs, 
taxes,  and  all  public  dues,  1.52  ; 
dangerous  substitute  for  money, 
154. 

Silver  coinage,  acts  regulating,  148, 
149,  152. 

Silver  commission,  report  of,  criti- 
cised, 151. 

Silver  dollar,  authorized  by  act  of 
April,  1792,  148  ;  coinage  discon- 
tinued by  act  of  1873, 150;  revived 
by  act  of  1 878, 1 52 ;  weight  of,  1 50 ; 
amount  coined  per  month,  150; 
amount  outstanding,  153  ;  effect  of 
continued  coinage,  153. 

Small  Treasury  notes  of  1815,  descrip- 
tion of,  34. 

Spaulding,  E.  G.,  New  York,  brings 
legal- tender  bill  before  Committee 
of  Ways  and  Means,  120  ;  intro- 
duces iaiU  in  House,  124  ;  letter  of 
Secretary  Cha.se  to,  124  ;  extract 
from  speech  of,  on  legal-tender 
bill,  124. 

Special  session  of  Congress,  in  1837, 
183;  in  1861,  84. 

Specie,  difficulty  to  procure,  31 ;  de- 
mand notes  payable  in,  53  ;  legal- 
tenders  payable  in,  after  January 
1,  1879,  141  ;  first  instalment  of 
surplus  paid  to  States  in,  184. 

Specie  bank,  Hutchison's,  3. 

Specie  payments  suspended  in  1814,. 


246 


INDEX. 


31 ;  snspendcd  in  1837,  40 ;  resump- 
tion oT,  in  ISoS,  43  ;  suspension  of, 
in  IS57,  70  ;  suspension  of,  in  IStil, 
84  ;  resumption  of,  by  United 
States  on  Januaiy  1,  1S70,  141  ; 
ail  but  six  deposit  banks  suspend, 
1S3. 

Bpencer,  John  C. ,  Secretary  of  Treas- 
ury. 5"i  ;  issues  Treasury  notes  at 
nominal  interest  payable  on  de- 
mand, 52  ;  his  notes  investigated 
by  Committee  of  Ways  and  Means, 
53. 

State  banks,  public  funds  deposited 
with,  40 ;  act  regulating  depo.sit 
of  lawful  money  with,  40,  178  ;  de- 
prived of  deposits  by  distribution 
of  surplus,  Ibl  ;  forms  of  drafts 
on,  182. 

States  recommended  to  make  Con- 
tinental money  legal-tender,  119; 
paper  money  issued  by,  during 
Revolution,  10  ;  deprived  of  au- 
thority to  issue  paper  money,  13  ; 
right  to  charter  banks  to  issu3 
notes,  11 ;  lack  of  authority  to 
coin  money,  11  ;  deposit  of  surplus 
with,  181  ;  table  showing  appor- 
tionment among,  180  ;  to  give  au- 
thority to  Treasurers  to  receive  de- 
posit of  surplus,  ISO  ;  laws  of,  rela- 
tive to  deposit  of  surplus,  181  ; 
use  of  depo.sits  by,  190;  amounts 
deposited  with,  carried  on  Treas- 
ury books  as  unavailable  funds, 
1 90  ;  public  works  undertaken  by, 
186;  power  to  borrow  money,  59. 

States,  Southern,  secession  of,  83. 

Stevens,  Thaddeus,  Pennsylvania, 
close  debate  on  legal-tender  bill, 
126  ;  extract  from  speech  on  legal- 
tender  bill,  126. 

Story,  Mr.  Justice,  comments  on 
power  of  States  to  charter  banks 
to  issue  notes,  11. 

Sumter,  Fort,  effect  of  attack  on, 
83. 

Supreme  Court  decisions  in  legal-ten- 
der cases  (see  Decisions  and  Dis- 
senting Opinions). 

Surplus  revenues,  estimates  from 
1816  to  1829,  167,  168  ;  propo.sition 
to  distribute  among  the  States, 
?C9;  Mr.  Dickerson's  proposition 
in  1827,  167  ;  estimate  of  amount 
on  January  1,  1836,  171  ;  views  of 


President  Jackeon  as  to  disposi. 
tion  of,  171-116  ;  report  of  select 
committee  on,  175  ;  bill  to  deposit 
with  States,  178;  ai)portionment 
among  States,  180  (see  Deposit 
of  Surplus  with  States). 
Swayne,  Mr.  Justice,  concurs  in 
dissenting  opinion  in  first  legal- 
tender  case,  160. 

Talmadge,  Nathaniel  P.,  New 
York,  in  favor  of  Treasury  notes, 
45. 

Taney,  Roger  P.,  Secretary  of 
Treasury,  175  ;  issues  orders  for 
removal  of  deposits,  175. 

Tariff  of  1842,  63. 

Taxation,  reduction  of  remedy  for 
surplus,  173. 

Tender  (see  Legal  Tender). 

Three  per  cent,  certificates  (see 
Certificates). 

Three-sixty-five  notes  proposed,  88. 

Treasuries  of  colonies,  issue  of  paper 
money  by,  1,  2. 

Treasury  notes  of  1812-1815  author- 
ized, 25,  29,  30,  S3  ;  signed  by  per- 
sons designated  by  President,  25  ; 
countersigned  by  Commissioners 
of  Loans,  25 ;  money  borrowed 
upon  security  of,  26 ;  receivable 
for  dues,  duties,  etc.,  26;  Niles' 
register  upon,  26  ;  small  notes 
of  1815,  34 ;  denomint-tions  of,  26, 
30,  38  ;  interest  on,  39  ;  penalties 
for  counterfeiting,  26. 

Treasury  notes  of  period  of  1837  au- 
thorized, 42,  4.5,  46,  51  ;  signed  by 
Treasurer,  42 ;  countersigned  by 
Register,  42 ;  receivable  for  all 
debts  due  Government,  42  ;  inter- 
est on,  42,  4.5,  52  ;  denominations 
of,  41,  52  ;  payable  one  and  two 
years  after  date,  51 ;  outstanding, 
52. 

Treasury  notes  issued  by  Jolm  C 
Spencer,  52,  54,  60. 

Treasury  notes  of  Mexican  War, 
authorized,  63,  64 ;  signed  by 
Treasurer  and  Register,  64  ;  othei 
features  of,  64;  amounts  issued, 
64,  69 ;  denominations  of,  64,  69. 

Treasury  notes  of  Buchanan  Admiu- 
istration,  recommended  by  Sec- 
retary Cobb,  70;  authorized,  70: 
features  of  law  authorizing,  71 ; 


INDEX. 


247 


offered  to  lowest  interest  bidder, 
71  ;  amount  issued,  71  ;  denomina- 
tions of,  71  ;  act  of  December, 
18()0,  75;  operations  of  Secretary 
Dix,  76. 

Treasury  notes  of  Civil  War  (see 
Seven-thirty  notes.  Compound  in- 
terest notes,  One-  and  two-year 
notes,  and  Notes). 

Treasury  notes,  outstanding  in  1884, 
71,  118;  forms  of,  3.5,  L!6,  47,  O.i, 
67,  73.  81,  91,  100,  105-108,  111- 
112,  137,  end  of  text;  no  legal- 
tender  until  1801,  117;  depreciation 
of,  33,  38,  44,  76,  77  ;  premium  on, 
37,  45. 

Tyler,  John,  President,  .53  ;  vetoes 
bill  to  create  a  National  Bank,  53  ; 
recommends  bill  for  Exchequer 
notes,  53. 

Understandino  of  Treasury  with 

banks  in  1862,  9.5. 
United  States,  JJank  of,  question  of 

recharter,    174 ;    Jackson's  attack 

on,     174 ;    veto  of  recharter  bill, 

172 ;    removal  of    deposits,    175 ; 

charter  expires,  40. 
United  States  notes  (see  Treasury 

notes,  and  Notes). 
Use  of  postage  stamps  for  change, 

100. 
United  States  Supreme  Court  (see 

Courts). 

Vallandigham,  C.  L.,  Ohio,  op- 
poses legal-tender  bill,  129. 

Van  Buren,  Martin,  President  of  the 
United  States,  183 ;  calls  extra 
session  of  Congress,  183. 

Veto  of  bill  rechartering  Bank  of 
United  States,  174 ;  of  bill  for 
National  Bank  by  President  Tyler, 
53  ;  of  act  for  coinage  of  silver 
dollar  by  President  Hayes,  1.50. 

Vote  of  States  in  Federal  Conven- 
tion, 16 ;  on  first  Treasury  note 
biU  m  House,  25;  in  House  and 
Senate  on  second    Treasury  note 


bill,  29  ;  on  Treasury  note  bill  of 
1837  in  House  and  Senate,  41,  42  ; 
on  Treasury  note  bill  of  1 838  in 
House  and  Senate,  45  ;  on  Treas- 
ury note  bill  of  1840  in  House, 
46 ;  on  legal-tender  bill,  135 ;  on 
coinage  act  of  1873,  150;  on  de- 
posits of  surplus  with  the  States, 
178  ;  on  postponement  of  lourth 
instalment,  187 

War  declared  -with  England,  22; 
declared  with  Mexico,  63 ;  Jack- 
son's, with  Bank  of  United  States, 
174 ;  Civil,  inaugurated,  83. 

War  measure,  issue  of  Treasury  and 
legal-tender  notes  a,  22,  64,  i24. 

Ways  and  Means  Committee  (see 
Committee  of  Ways  and  Means). 

Webster,  Daniel,  views  on  right  of 
State  to  charter  bank  to  issue 
notes,  11  ;  on  legal-tender  under 
Constitution,  IS. 

Webster,  Petaliah,  views  as  to  evils 
of  paper  money  in  Colonies,  4. 

Whig  party,  opposition  to  Treas- 
ury notes,  44,  49 ;  support  a  loan 
bill,  50. 

Whigs  refused  to  vote  in  House  in 
1840,  46. 

Wilson  James,  Pennsylvania,  op- 
posed to  paper  money  in  Federal 
Convention,  15. 

Wise,  Henry  A.,  Virginia,  favors 
paying  fourth  instalment,  187. 

Withdrawal  of  deposits  from  Bank 
of  the  United  States,  175  ;  fi-om  de- 
posit banks,  181 ;  from  States.  190. 

Woodbury,  Levi,  Secretary  of  Treas- 
ury, 41  ;  recommouds  Treasury 
notes,  41  ;  reports  amount  of 
Treasury  notes  outstanding,  46 ; 
disapproves  of  distribution  of 
surplus  among  the  States,  171  ; 
method  of  distribution  of  surplus, 
181. 

Wright,  Silas,  New  York,  Chair- 
man Senate  Finance  Committee, 
184  ;  reports  bill  for  postponement 
of  fotu'th  instalment,  184. 


POLITICAL    SCIENCE    AND 
ECONOMY. 


POLITICAL  SCIENCE;  Or,  The  State  Theoretically  and  PractH 
caliy  Considered.  By  THEODORE  D.  WOOLSEY,  D.D., 
LL.D.j  late  President  of  Yale  College.    2  vols.,  8vo,  $5.00, 

THE  BOSTON  TRANSCRIPT.— "No  work 'in  Political  Science  has  ever  been 
|»nbUshe(l  In  America  which  covers  so  wide  a.  ground  and  which  treats  the  sub- 
ject so  fairly  and  impartially,  and  with  so  thorough  knowledge  and  judgment." 

THE  CINCINNATI  GAZETTE.— "  This  work  is  indeed  one  of  the  most  im 
portant  contributions  of  the  century  to  the  science  of  natural  and  national  law  ana 
ethics." 

THE  N.  Y.  TRIBUNE.  —"  In  the  discussion  of  the  macifold  questions  suggested 
by  the  general  theme  of  the  work  Dr.  Woolsey  exhibits  the  same  cautiousness  of 
judgment,  moderation  of  tone,  and  vigor  of  expression  which  characterize  his 
previous  writings.  His  volumes  abound  with  the  signs  of  profound  study  and 
copious  erudition  as  well  as  of  original  thought." 


INTRODUCTION  TO  THE  STUDY  OF  INTERNATIONAL  LAW. 

Designed  as  an  Aid  in  Teaching  and  in  Historical  Studies. 
By  THEODORE  D.  WOOLSEY,  D.D.,  LL.D-,  late  President 
of  Yale  College.  Fifth  edition,  revised  and  enlarged.  Crown 
8vo,  $2.50. 

A  complete  outline  of  that  grand  system  of  ethical  j">risprudence 
which  holds,  as  it  were,  in  one  community  the  naftions  of  Christendom. 
Its  appendix  contains  a  most  useful  list  of  the  principal  treaties  since 
the  Reformation.     The  work  has  no  rival  as  a  text  book. 

Special  attention  Is  directed  to  the  fact  that  this  FIFTH  EDITION  of  Dr. 
Woolsey's  International  Law  is  entirely  re-written  and  enlarged,  and  is  printed 
from  new  plates. 

THE  ST.  LOUIS  REPUBLICAN.— "A  compendium  treatise.  Intended  not  for 
lawyers  nor  for  those  having  the  profession  of  law  in  view,  but  for  young  men  who 
are  cultivating  themselves  by  the  study  of  historical  and  political  Science.  While 
Jhe  work  gives  the  state  of  the  law  of  nations  as  it  Is,  It  compares  the  actual  la'v 
fvith  the  standard  of  justice,  and,  by  exhibiting  the  progress  of  science  In  n 
tistorical  way,  brings  It  Into  connection  with  the  advances  of  humaoHf  attA 
liTllization." 


STAND  A  ED   TEXT  BOOKS. 


POLITICAL  ECONOMY.  By  ARTHUR  LATHAM  PERRY,  Pro- 
fessor of  History  and  Political  Economy  in  Williams  College. 
Crown  8vo,  $2.50. 

Professor  Perry's  book  has  passccl  throngh  many  editions  and  baa 
recently  been  subjected  to  a  thorough  revision  and  recasting.  Ilia 
work  is  a  complete  exposition  of  the  Science  of  Political  Economy  both 
historically  and  topically,  his  style  is  admirably  clear  and  racy  ;  his 
illustrations  are  forcible  and  well  chosen,  and  he  has  made  a  subject 
interesting-  and  open  to  the  comprehension  of  any  diligent  student, 
which  has  often  been  left  by  writers  vague  and  befogged  and  bewilder- 
ing. This  work  has  stood  excellently  the  test  of  the  class  room,  and 
h^iij  been  adopted  by  many  of  the  chief  educational  institiitions  in  this 
country.  Among  them  are  Yale  College,  Bowdoiu  College,  Dartmouth, 
Trinity,  Wesleyan,  University  of  Wooster,  Denisou  University, 
Rutgers  College,  New  Y'ork  University,  Union  College,  and  many  other 
colleges  and  normal  and  high  schools. 

T.  D.  WOOLSEY,  President  of  Tale  College.— "Yom:  book  interests  students 
more  than  any  I  liave  ever  instracted  from." 

THE  NEW  YORK  TIMES.— "As  a  manual  for  general  reading  and  popular 
Instruction,  Prof.  Perry's  book  is  far  superior  to  any  work  on  tUe  subject  before 
Issued  in  the  United  States." 

TH  E  N  ATION.— "  We  cordially  recommend  this  book  to  all,  of  whatever  school 
of  political  economy,  who  enjoy  candid  statement  and  full  and  logical  discussion." 

THE  INDEPENDENT.— "There  is  more  common  sense  in  this  book  than  in  any 
of  the  more  elaborate  works  on  the  same  subject  that  have  preceded  it.  It  is  tho 
most  interesting  and  valuable  one  that  has  been  given  to  the  American  public  oa 
this  important  subject." 

INTRODUCTION  TO  POLITICAL  ECONOMY.  By  ARTHUR 
LATHAM  PERRY,  Professor  of  History  and  Political  Econ' 
omy  in  Williams  College.    Revised  edition.    12moj  S1.50. 

FROM  THE  PREFACE.— "I  have  endeavored  in  this  book  so  to  lay  the  founda- 
tions of  Political  Economy  in  their  whole  circuit,  that  they  will  never  need  to  be 
disturbed  afterwards  by  persons  resorting  to  it  for  their  early  instruction,  how- 
ever long  and  however  far  these  persons  may  pursue  their  studies  in  this  science." 

THE  N.  Y.  EVENING  POST.— "This  work  is  not  meant  in  any  way  to  take 
the  place  of  its  author's  larger  treatise,  but  rather  to  occupy  a  field  which,  in  the 
nature  of  the  case,  that  work  cannot  occupy.  It  is  net  an  abridgment  of  that 
work  but  a  separate  treatise,  intended  primarily  for  the  use  of  students  and 
readers  whose  time  for  study  is  small,  but  who  wish  to  learn  the  broad  principles 
of  the  science  thoroughly  and  well,  especially  with  reference  to  the  scientific 
principles  which  are  involved  in  the  practical  discussions  of  our  time.  •  *  «  We 
need  scarcely  add,  with  respect  to  a  writer  so  well  known  as  he,  that  his  thinking 
b  sound  as  well  as  acute,  or  that  his  doctrines  are  those  which  th«  greatest 
toasters  of  poUtical  science  have  approved.'' 


CHARLES  SCninNEB'S  SONS' 


AMERICAN    POLITICAL    ECONOMY.    By   FRANCIS  BOWEN, 

Professor    of    Natural    Religion    and    Moral   Philosophy    in 
Harvard  College.    8vo,  S2.50. 

This  treatise  presents  views  compatible  with  the  idea  that  ' '  every 
country  has  a  political  economy  of  its  own,  suitable  to  its  own  physical 
circvinistances  of  position  on  the  globe,  and  to  the  character,  habits, 
and  institutions  of  the  people. " 

THE  PHILADELPHIA  AGE. — "If  our  members  of  Congress  would  votethem- 
eelves  a  copy  of  this  book,  and  read  it,  fewer  wild  schemes  would  be  concocted 
by  them,  and  a  great  saving  of  time  and  the  people's  m'bney  would  be  secured." 

THE  SPRINGFIELD  REPUBLICAN.— "His  arguments  are  worth  considering, 
lind  his  whole  book  is  of  high  value  to  any  American  to  study  economical  ques- 
tions." 


CONTEMPORARY  SOCIALISM.     By  JOHN  RAE,  M.A. 
8vo,  S2.50. 

Such  a  book  as  this  which  Mr.  Rae  has  written — a  thorough  history 
fend  analysis  by  a  mian  of  singularly  candid  and  liberal  mind,  equally 
without  prejudice  and  fanaticism — has  long  been  needed  and  earnestly 
wished  for  by  every  student  of  socialism,  and  in  all  countries. 

THE  LONDON  SATURDAY  REVIEW.— "A  useful  and  ablywritten  book." 

THE  CONGREGATIONALIST.— "No  subject  more  needs  thorough  and  Im- 
partial discussion  at  present  than  this,  and  the  work  before  us  by  John  Rae  is  em- 
inently able  and  helpful.  It  is  distinguished  in  a  remarkable  degree  by  breadth  of 
view  and  the  grasp  of  underlying  and  widely  reac'uing  principles,  and  also  by  his 
minuteness  of  detail  and  the  careful  relation  o'.  facts  and  figures  In  support  of  its 
position." 

COMMUNISM  AND  SOCIALISM.  In  their  History  and  Theory. 
A  Sl<etch.  By  THEODORE  D.  WOOLSEY,  D.D.,  LL.D., 
late  President  of  Yale  College.    12mo,  SI. 50. 

This  book  is  the  only  comprehensive  review  of  its  subject,  withiu 
small  compass,  yet  exactly  meeting  the  needs  of  the  reader,  that  is  ac- 
cessible in  English.  The  candor  of  the  discussion  is  remarkable  ;  the 
book  is  the  argument  of  a  perfectly  fair  reasoner,  painting  nothing  in 
too  dark  colors,  but  taking  his  opponents  at  their  best. 

THE  N.  Y.  COMMERCIAL  ADVERTISER.— "The  work  is  an  epitome  of  thg 
history  of  the  socialistic  and  communistic  movement,  and  will  prove  a  most  valw 
Ible  text  book  to  all  wlio  have  not  made  themselves  familiar  with  this  giecl 
iQbjeot." 


HISTORY    AND    BIOGRAPHY. 


THE  DAWN  OF  HISTORY.  An  Introduction  to  Pie-Historic 
Stuclyo  New  and  revised  edition.  Edited  by  C.  F.  KEARY. 
12mo,  SI. 25. 

This  work  treats  successively  of  the  earliest  traces  of  man  in  the 
remains  discovered  in  caves  or  elsewhere  in  different  parts  of  Europe  ; 
of  language,  its  growth,  and  the  story  it  tells  of  the  pre-historic  users 
of  it ;  of  the  races  of  mankind,  earlj'  social  life,  the  religions,  mythol- 
ogies, and  folk-tales  of  mankind,  and  of  the  history  of  writing.  The 
present  edition  contains  more  than  a  hundred  pages  of  new  matter,  in 
which  are  embodied  the  results  of  the  latest  researches, 

BOSTON  SAT.  EVE.  GAZETTE.— "A  fascinating  manual,  without  a  vestige 
of  the  dullness  usually  charged  against  scientific  works.  In  Its  way,  the  work  la 
a  model  of  what  a  popular  scientlflc  work  should  be." 

THE  ORIGIN  OF  NATIONS.  By  Professor  GEORGE  RAWLI^i- 
SON,  M.A.    12mo,  with  maps,  SI. 00. 

The  first  part  of  this  book,  Early  Civilizations,  discusses  the  an- 
tiquity of  civilization  in  Egypt  and  the  other  early  nations  of  the  East. 
The  second  part.  Ethnic  Affinities  in  the  Ancient  World,  is  an  examin- 
ation of  the  ethnology  of  Genesis,  showing  its  accordance  with  the 
latest  results  of  modem  ethnographical  science. 

CONGREGATIONALIST.— "A  work  of  genuine  scholarly  excellence,  and  a 
useful  offset  to  a  great  deal  of  the  superficial  current  literature  on  such  subjects." 

WANUAL  OF  MYTHOLOGY.  For  the  Use  of  Schools,  Art  Stu- 
dents, and  General  Readers.  Founded  on  the  Works  of 
Petiscus,  Preiier,  and  V/elcker.  By  ALEXANDER  S.  MUR- 
RAY, Department  of  Greek  and  Roman  Antiquities,  British 
Museum.  With  45  Plates  on  tinted  paper,  representing 
more  than  90  Mythological  Subjects.  Reprinted  from  the 
Second  Revised  London  Edition.    Crown  8vo,  SI. 75. 

THE  CLEVELAND  HERALD.— "It  has  been  acknowledged  the  best  work  on 
the  subject  to  be  found  in  a  concise  form,  and  as  it  embodies  the  results  of  the 
latest  researches  and  discoveries  in  ancient  mythologies,  it  is  superior  for  school 
und  general  purijoses  as  a  hanJ  book  to  any  of  the  so-called  standard  works." 

THE  BOSTON  JOURNAL.— "Whether  as  a  manual  for  reference,  a  text  bcolf 
for  school  use,  or  for  the  general  reader,  the  book  will  be  found  very  valuable  &a4 
to'^erestuyt." 


STANDARD   TEXT  BOOKS. 


THE    REFORMATION.     By   Prof.  GEORGE   P.  FISHER,  D.D., 

Professor  of  Ecclesiastical  History  in  Yale  College.     Crown 
8vo,  S2.50. 

THE  CHRISTIAN  UNION.— "Tlie  book  is  a  remarkable  instance  of  that 
power  of  lucid  condensation  which  its  author  possesses  in  a  high  degree.  »  »  * 
The  quality  of  condensedness  renders  it  worthy  to  be  studied,  not  merely  read  ; 
and  it  would  be  excellent  as  a  text  book  in  college." 

PROF.  CHARLES  A.  AIKEN,  D.D.,  Princeton  Theological  Seminary.— "Vro- 
fessor  Fisher's  History  of  the  Reformation  presents  the  results  of  prolonged, 
extended,  and  exact  study,  with  those  excellent  qualities  of  style  which  are  so 
characteristic  of  him— clearness,  smoothness,  judicial  fairness,  vividness,  felicity 
in  arranging  material,  as  well  as  In  grouping  and  deUneating  characters." 

THE  ANCIENT  EMPIRES  OF  THE  EAST.  By  Prof.  A.  H. 
SAYCE,  of  Oxford.    12mo,  81.50. 

THE  s.  S.  TIMES.—"  Prof.  Sayce's  history  is  the  best  popular  book  inlts  field. 
It  is  abreast  of  modern  research ;  its  point  of  view  is  broad  and  comprehensive, 
and  its  style  is  such  as  to  commend  it  to  the  wide  public  to  which  it  is  addressed." 

THE  JOURNAL  OF  EDUCATION.— "Mr.  Sayce  is  recognized  as  the  leading 
Assyriologist  of  our  day,  and  has  given  in  this  valuable  book  the  latest 
results  of  the  latest  researches  into  the  mysterious  antiquity  of  the  ancient  Orien- 
tal civiUzations.  He  gives  us  Information  not  to  be  found  elsewhere,  and  much 
which  lies  dispersed  in  periodicals  of  only  limited  circulation.  It  Is  indlspensabla 
for  every  student  of  history." 

THE  UNITED  STATES :  Its  History  and  Constitution.  By  ALEX- 
ANDER JOHNSTON,  late  Professor  in  Princeton  College. 
12mo,  SI. 00. 

Professor  Johnston's  work  is  unique  in  that  it  presents  in  a  single 
voUime  of  about  three  hundred  pages,  a  hicid,  scholarly,  well-ordered 
narrative  of  the  history  of  the  United  States,  from  the  earliest 
discoveries  down  to  the  present  time.  As  a  compact  manual  for  class 
use  it  will  be  found  invaluable. 

SCHOOL  JOURNAL.— "A  masterly  statement  of  the  constitutional  and 
political  history  of  the  country.  It  is  comprehensive  and  adequate,  yet  wonder- 
fully clear  and  compact.  Its  value  is  equally  great  for  general  reading,  or  for 
reference." 

HISTORICAL  OUTLINE  OF  THE  ENGLISH  CONSTITUTION 
FOR  BEGINNERS.    By  D.  W.  RANNIE.    12mo,  $1.00. 

THE  N.  Y.  SUN.— "As  a  compendium  of  the  cardinal  events  and  accepted 
principles  of  constitutional  history  it  may  be  cordially  recommended  to  those 
who  are  beginning  the  study  of  a  political  system." 

THE  BOSTON  COURIER.— "The  book  is  a  very  valuable  manual  for  young 
people.   The  manner  Is  clear  and  simple,  and  the  outlines  are  clear  and  accurate." 


CnARLES  SCEIBNER'S  SONS' 


EPOCHS  OF  HISTORY. 

CHARLES  KENDALL  ADAMS,  President  Of  Cornell  University.— "A  Series 
of  concise  and  carefully  prepared  volumes  on  special  eras  of  history.  Eacti  i% 
"levoted  to  a  group  of  events  of  sucti  iaiportance  as  to  entitle  it  to  be  regarded  as 
an  epoch.  Eacli  is  also  complete  in  itself,  and  lias  no  especial  connection  with 
the  other  members  of  the  series.  The  works  are  all  written  by  authors  selected 
by  the  editor  on  account  of  some  especial  quallflcations  for  a  portrayal  of  the 
period  they  respectively  describe.  The  volumes  form  an  excellent  collection^ 
especially  adapted  to  the  wants  of  a  general  reader." 

NOAH  PORTER,  President  of  Tale  College.— "The  •  Epochs  of  History '  seem 
to  me  to  have  been  prepared  with  knowledge  and  artistic  skill  to  meet  the  wants 
Oi  a  large  number  of  readers.  To  the  young  they  furnish  an  outline  or  compen- 
dium which  may  serve  as  an  introduction  to  mere  extended  study.  To  those 
who  are  older  they  present  a  convenient  sketch  of  the  heads  of  the  knowledge 
which  they  have  already  acquired.  The  outlines  are  by  no  means  destitute  of 
Bpirit,  and  may  be  used  with  great  profit  for  family  reading,  and  in  select  classes 
or  reading  clubs." 

BISHOP  JOHN  F.  HURST,  Ex-PresiOent  Of  Drew  TTieological  Seminary.— 
"  It  appears  to  me  that  the  idea  of  Morris  in  liis  Epochs  is  strictly  in  harmony 
with  the  philosophy  of  history— namely,  that  great  movements  should  be  treated 
not  according  to  narrow  geographical  and  national  Umits  and  distinction,  but 
universally,  according  to  their  place  in  the  general  life  of  the  world.  The  histor- 
ical Maps  and  the  copious  Indices  are  welcome  additions  to  the  volumes." 

THE  NATION. — "  The  volumes  contain  the  ripe  results  of  the  studies  of  men 
who  are  authorities  in  their  respective  fields." 


EPOCHS  OF  ANCIENT  HISTORY.  A  series  of  books  narrating 
the  History  of  Greece  and  Rome,  and  of  their  relations  to 
other  countries  at  successive  epochs.  Edited  by  Rev.  G.  Wt 
COX,  and  CHARLES  SANKEY,  M.A.  Eleven  volumes, 
16mo,  writh  41  Maps  and  Plans.  Sold  separately.  Price  pe^ 
vol.,  SI. 00.   The  set,  Roxburgh  style,  gilt  top,  in  box,  Sll.OO, 

TROY— ITS  LEGEXD,  HISTORY,  AXD  LITERATURE.   By  S.  G.  W.  Benjamd^ 

THE  GREEKS  A:^^D  THE  PERSL\^yS.    By  G.  W.  Cox. 

THE  ATHE^TA^T  EJIPIRE.    By  G.  W.  Cox. 

THE  SPARTAN  AXD  THEBAN  SUPREMACIES.    By  Charles  Sankey. 

THE  MACEDONIAN  EMPIRE.    By  A.  M.  Cubteis. 

EARLY  ROME.    By  W.  Ihne. 

ROME  AND  CARTHAGE.    The  Punic  Wars.    By  R.  Bosworth  Smitu. 

THE  GRACCHI,  MARIUS  AND  SULLA.    By  A.  H.  Beesley. 

THE  ROMAN  TPJTMrVTRATES.    By  Charles  Meritale. 

THE  EARLY  EMPIRE.    By  W.  Wolfe  Capes. 

tHE  AGE  OF  THE  ANTONINES.    By  W.  Wolfe  Capes. 


STANDARD   TEXT  BOOKS. 


EPOCHS  OF  MODERN  HISTORY.  A  series  of  books  narrating 
the  History  of  England  and  Europe  at  successive  epochs 
subsequent  to  the  Christian  era.  Edited  by  EDWARD  E, 
MORRIS.  Eighteen  volumes,  16mo,  with  77  Maps,  Plans, 
and  Tables.  Sold  separately.  Price  per  vol.,  SI. 00.  The 
set,  Roxburgh  style,  gilt  top,  in  box,  S18.00. 

l-HE  BEGINNING  OF  THE  MIDDLE  AGEf.    By  R.  W.  Crubch. 

THE  NORMANS  IN  EUROPE.    By  A.  H.  Johnson. 

THE  CRUSADES.    By  G.  W.  Cox,  M.A. 

THE  EARLY  PLANTAGENETS.    By  Wm.  Stubbs. 

EDWARD  HI.    By  W.  Warburton. 

THE  HOUSES  OF  LANCASTER  AND  YORK.    By  James  Gairdner. 

THE  ERA  OF  THE  PROTESTANT  REVOLUTION.  By  Frederic  Seiibohm 
With  Notes  on  Books  in  Englisli  relating  to  the  Reformation.  By  Prol 
George  P.  Fisher,  D.D. 

THE  EARLY  TUDORS.    Henry  VIL;  Hem-y  Vin.    ByC.  E.  Moberly. 

THE  AGE  OF  ELIZABETH.    By  M.  Creighton. 

THE  THIRTY  YEARS'  WAR,  161S-1648.    By  Samuel  Rawson  G-Uidineb. 

THE  PURITAN  REVOLUTION.     By  Samuel  Rawson  Gardiner. 

THE  FALL  OF  THE  STUARTS.    By  Edward  Hale. 

THE  AGE  OF  ANNE.    By  Edward  E.  Morris. 

THE  EARLY  HANOVERIANS.    By  Edward  E.  Mokeis. 

FREDERICK  THE  GREAT.    By  F.  W.  Longman. 

THE  FRENCH  REVOLUTION  AND  FIRST  EMPIRE.  By  William  O'Connor 
Morris.    With  Appendix  by  Andrew  D.  White,  LL.D. 

THE  EPOCH  OP  REFORM,  1830-1850.    By  JuSTIN  MCCARTHY. 

THE  ENGLISH  RESTORATION  AND  LOUIS  XIV.    By  Osmund  Airy,  M.A. 

THE  HISTORY  OF  ROME,  from  the  Earliest  Time  to  the  Period 
of  its  Decline.  By  Dr.  THEODOR  MOMMSEN.  Translated, 
with  the  author's  sanction  and  additions,  by  W.  P.  Dickson, 
D.D,,  LL.D.  With  an  Introduction  by  Dr.  Leonhard  Schmitz. 
Reprinted  from  the  Revised  London  Edition.  Four  volumes 
crown  8vo,  gilt  top.    Price  per  set,  S8.00. 

LONDON  TIMES.— "A  work  of  the  lery  highest  merit;  its  learning  is  exact 
and  profound ;  its  narrative  full  of  genius  and  skill ;  its  descriptions  of  men  are 
liumirably  vivid.  We  wish  to  place  on  record  our  opinion  that  Br.  Mommsen's  la 
by  far  the  best  history  of  the  Decline  and  Fall  of  the  Roman  Commonwealth." 

DR.  SCHMITZ.— "Since  the  days  of  Niebnhr,  no  work  on  Roman  History  has 
lippeared  that  combines  so  much  to  attract,  instruct,  and  charm  the  reader.  Its 
Ityle— a  rare  quality  in  a  Germar  author— ia  %'lgorous,  spirited,  and  animated 
Professor  Mommsew's  wort  ca»i  stap^'  a  compaj;afla  with  the  noblest  productions 
If  modern  history," 


CHAELES   SCnrnNER'S    SONS' 


AX  ADDITTOiV  TO   THEODOR   MOMMSEN'S  HTSTORT  OF  ROMS. 

THE  PROVINCES  OF  THE  ROMAN  EMPIRE.  From  Caesar  t« 
Diocletian.  By  THEODOR  MOMMSEN.  Translated  witK 
the  author's  sanction  and  additions,  by  William  P.  Dickson^ 
D.D.,  LL.D.  With  ten  maps,  by  Professor  Kiepert.  2  vols., 
8vo,  S6.00. 

COKTENTS:  The  Northern  Frontier  of  Italy— Spain— The  Gallio 
Provinces — Roman  Germany  and  the  Free  Germans — Britain — The 
Danubian  Lands  and  the  Wars  on  the  Danube — Greek  Europe — Asia 
Minor— The  Euphrates  Frontier  and  the  Parthi an s— Syria  and  the 
Land  of  the  Nabatseans — Judea  and  the  Jews — Egypt — The  African 
Provinces. 

N.  Y.  SUN.—"  Professor  Mommsen's  work  goes  further  ;than  any  other  ex- 
tant, or  now  lookecl  for,  to  provide  us  with  a  key  to  the  mediseval  history  of  the 
Mediterranean  world." 

PROF.  w.  A.  PACKARD,  in  Freshyterian  Review.—"  ThQ  author  draws  the 
wonderfully  rich  and  varied  picture  of  the  conquest  and  administration  of  that 
great  circle  of  peoples  and  lands  which  formed  the  empire  of  Rome  outside  of 
Italy,  their  agriculture,  trade,  and  mantifactures,  their  artistic  and  scientific  Ufe, 
through  all  degrees  of  civilization,  with  such  detail  and  completeness  as  could 
have  come  from  no  other  hand  than  that  of  this  great  master  of  historical  research 
ta  all  its  departments,  guided  by  that  gift  of  historical  imagination,  for  which  ha 
js  equally  eminent." 

THE  HISTORY  OF  GREECE.  By  Prof.  Dr.  ERNST  CURTIUS. 
Translated  by  Adolphus  William  Ward,  M.  A.,  Fellow  of  St. 
Peter's  College,  Cambridge,  Prof,  of  History  in  Owen's  Col* 
lege,  Manchester.  Uniform  with  Mommsen's  History  of 
Rome.  Five  volumes,  crown  8vo,  gilt  top.  Price  per  set, 
S10.00. 

LONDON  ATHEN^UR/I.— "Professor  Curtlus' eminent  scholarship  Is  a  suffl- 
Bient  guarantee  for  the  trustworthiness  of  his  history,  while  the  skUl  with  whicb 
We  groups  his  facts,  and  his  effective  mode  of  narrating  them,  combine  to  render 
It  no  less  readable  than  sound.  Prof.  Curtlus  everywhere  maintains  the  true 
tignity  and  impartiality  of  history,  and  It  Is  evident  his  sympathies  are  on  the 
lide  of  justice,  humanity,  and  progress." 

LONDON  SPECTATOR.— "We  cannot  express  our  opinion  of  Dr.  Curtlus' 
book  better  than  by  saying  that  it  may  be  fitly  ranked  with  Theodor  Mommsen's 
freat  work." 

N.  Y.  DAILY  TRIBUNE.— "As  an  introduction  to  the  study  of  Grecian  history, 
to  previous  work  is  comparable  to  the  present  for  vivacity  and  picturesque 
beauty,  while  in  sound  learning  and  accuracy  of  statement  it  is  not  Inferior  la 
^e  elaborate  productions  which  enrich  the  Uterature  of  the  age.'? 


/ 


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PRINTED  IN  U.S.A. 

UC  SOUTHERN  REGIONAL  LIBRARY  FACILITY 


AA    001  274161    7 


3  1970  00735  0652 


